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January 28, 2010
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Fourth quarter adjusted (excluding special items) EPS was 9 cents, which topped the Zacks Consensus Estimate of 8 cents. Improvement in net income was primarily due to the huge reduction in operating expenditure. Quarterly total revenue was $5,723 million, down 5% year-over-year and also below the Zacks Consensus Estimate of $5,961 million.
Gross margin, in the fourth quarter was 35.7% compared to 29.7% in the prior-year quarter and 33.2% in the previous quarter. Quarterly operating expenditure was $1.88 billion compared to a massive $3.8 billion in the year-ago quarter. Huge restructuring initiative taken by the company resulted in an approximate reduction of 8,000 in headcount. In full fiscal 2009, Motorola saved $1.9 billion in operating expenses, of which $1.5 billion was saved in its struggling Mobile Devices division alone.
During the reported quarter, Motorola generated a massive $877 million in cash from operations compared to $201 million in the prior-year quarter and $616 million in the previous quarter. Free cash flow (cash flow from operations less capital expenditure), in the same quarter was $791 million, compared to a mere $4 million in the year-ago quarter and $574 million in the previous quarter.
Cash, cash equivalents, & marketable securities at the end of fiscal 2009 were more than $8 billion, compared to $7.45 billion at the end of fiscal 2008. Total debt at the end of fiscal 2009 was $3.9 billion, compared to $4.2 billion at the end of fiscal 2008.
Mobile Devices Division
Quarterly revenue was $1,824 million, down 22% year-over-year. Operating loss was $132 million, a significant reduction from an operating loss of $595 million in the year-ago quarter and a loss of $183 million in the previous quarter.
During the reported quarter, Motorola shipped 12 million mobile phones, commanding a global market share of just 3.7%. However, the newly launched two Google (GOOG) Android software-based 3G smartphones CLIQ and DROID witnessed impressive results. Launched in the fourth quarter of 2009, these two devices generated sales of 2 million units together in the quarter.
Home and Network Mobility Division
Quarterly revenue was $1,964 million, down 24% year over year. Operating income was $91 million compared to an operating income of $257 million in the year-ago quarter. During the fourth quarter, Motorola shipped 3.4 million digital entertainment devices.
Enterprise Mobility Solutions Division
Quarterly revenue was $1,954 million, down 12% year over year. Operating income was $368 million compared to an operating income of $466 million in the year-ago quarter. During the fourth quarter, Motorola started shipment of the APX 7500 multi-band mobile radios, making it the first and only company to offer a complete family of multi-band radios.
Future Financial Outlook
Management provided guidance that the company’s GAAP EPS from continuing operations is expected to be in the range of a loss of 1 cent to a loss of 3 cents in the first quarter 2010. Management also predicted that the company will introduce at least 20 new versions of 3G smartphones throughout 2010.
In the pre-market trade in NYSE, share price of Motorola was down 45 cents (6.1%) to $6.95.
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