Motorola Q3 profits up 730 per cent
Iridium still draining dollars, though
Motorola bosses were in a jubilant mood yesterday as the company met analyst expectations with a Q3 profit way in excess of the one it reported for the same period last year. The company posted earnings of $332 million for the quarter, up from the $40 million is posted for last year's third quarter. Sales for the quarter totalled $7.7 billion, up seven per cent from $7.2 billion a year earlier. As anticipated -- Motorola itself warned Wall Street to expect one -- the company took a hefty charge against its reserve thanks to its continued role bankrolling Iridium, the troubled satellite cellphone business. It exposure to Iridium totalled $944 million. Motorola also took a $344 million hit against earnings for the sale of its analog semiconductor devices business, now operating independently as On Semiconductor. Bringing these and other factors into the equation, Motorola ended up with a profit of $91 million for the quarter, up from $27 million for the same period last year. Both Motorola's cellphone and semiconductor operations led the company's growth, with increases in sales of 37 per cent (to $3.1 billion) and 11 per cent (to $1.6 billion), respectively. Motorola's Internet; Integrated Electronic Systems; Commercial, Government and Industrial Systems businesses also notched up notable increases in sales -- the only downturns the company experienced were in its satellite (surprise, surprise) and Network Systems operations. And while Motorola's outlook is good, Iridium continues to overshadow the company's growth. The company reiterated financial support for Iridium beyond what it's already contracted to provide is contingent on the satellite company successfully restructuring its business. And while it has various contracts with Iridium, Motorola is refusing to count what it makes out the deal as real revenue. The company even admitted it isn't actually being paid to maintain Iridium's satellite network. As with the previous quarter's results, Motorola warned investors that it may well take a further charge in Q4 thanks to Iridium. Much will depend on Iridium's attempt to persuade other investors to back its restructure plan, though given it's been trying to do so for over two months, it's hard to expect a positive outcome. ®
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