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SMALL BUSINESS
Motorola Announces Second-Quarter Financial Results
The Company had positive operating cash flow of
"Motorola's Home and Networks Mobility and Enterprise Mobility Solutions
segments delivered strong results in the second quarter, driven by sales
growth and operating margin expansion. These segments are well positioned to
continue generating year-over-year sales and margin growth during the second
half," said
Operating Results
Mobile Devices segment sales were
Mobile Devices highlights:
* Shipped 28.1 million handsets, and maintained its share of the
global handset market
* Launched ten new products to key markets around the globe, which
included new 3G devices and the ROKR E8 that strengthened our music
franchise with its innovative, ModeShift(TM) morphing technology
* Refreshed the highly successful MING series, which has already sold
8 million handsets, by launching three touch screen handsets -- MING
A1600 and MING A1800, as well as the MOTO A810
* Continued market share leadership in North America, with strong
performance from W755
* Continued strength in Latin America, maintaining a leading market
position due to the strong performance within our music portfolio
* Earlier this week began shipping the MOTOZINE ZN5, a superior
imaging experience developed collaboratively with Kodak, which
enables consumers to easily shoot, edit and share their pictures
Home and Networks Mobility segment sales were
Home and Networks Mobility highlights:
* Operating margin expansion year-over-year from 7.4 percent of sales
to 8.9 percent of sales
* Record sales in Home, driven by shipments of 4.9 million digital
entertainment devices, due to continued strong demand for HD, HD/DVR
and IPTV devices
* Consumer demand for HD content continued to drive the uptake of
MPEG-4. This quarter we added DirectTV, HBO LatAM and Starz to the
lineup of programmers and service providers transitioning from
MPEG-2
* DOCSIS(R) 3.0 momentum with certification for multiple Motorola
cable modems, bronze qualification for the BSR 64000 cable modem
termination system edge route, as well as customer deployment with
J-Com in Japan
* Momentum in WiMAX continued and Motorola now has 19 contracts for
commercial WiMAX systems in 16 countries
Enterprise Mobility Solutions segment sales were
Enterprise Mobility Solutions highlights:
* Operating margin expansion year-over-year from 15.8 percent of sales
to 18.5 percent of sales
* Strong international demand continued in the enterprise and public
safety markets, as sales outside of North America grew by
approximately 21 percent compared to the year-ago quarter
* Launched the MC75 Rugged Enterprise Digital Assistant, the first
size-optimized rugged mobile computer with 3G WAN (HSDPA and EVDO
rev A) and integrated GPS navigation
* Key international systems wins, including digital communications
awards from Shanghai Metro and Beijing Police
* After the end of the quarter, signed a definitive agreement to
acquire AirDefense, a leading wireless LAN security provider
Third-Quarter and Full Year 2008 Outlook
The Company expects to report earnings from continuing operations in the
range of
Consolidated GAAP Results A comparison of results from operations is as follows:
Second Quarter ---------------------- (In millions, except per share amounts) 2008 2007 ------------------------------------------------------------------------
Net sales $8,082 $8,732 Gross margin 2,325 2,453 Operating earnings (loss) 5 (158) Earnings (loss) from continuing operations 4 (38) Net earnings (loss) 4 (28) Diluted earnings (loss) per common share: Continuing operations $0.00 $(0.02) Discontinued operations - 0.01 ---------------------- $0.00 $(0.01) ----------------------
Weighted average diluted common shares outstanding 2,269.5 2,296.3 ------------------------------------------------------------------------
Highlighted Items
EPS Impact Exp/(Inc) ------------------------------------------------------------ Investment impairment $0.03 Legal settlement 0.01 Separation-related transaction costs 0.01 Reorganization of business charges 0.01 Gain on the sale of an investment (0.01) Tax-related benefit (0.03) ---------- $0.02 ------------------------------------------------------------
Conference Call and Webcast
Motorola will host its quarterly conference call beginning at
Definitions
* Net Cash equals Total Cash minus Notes payable and current portion of
long-term debt minus Long-term debt.
** Total Cash equals Cash and cash equivalents plus Sigma Fund (current
and non-current) plus Short-term investments.
Business Risks
This press release contains "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such forward-
looking statements include, but are not limited to, Motorola's financial
outlook for the third quarter and full year of 2008, and the impact of pending
transactions. Motorola cautions the reader that the risk factors below, as
well as those on pages 18 through 27 in Item 1A of Motorola's 2007 Annual
Report on Form 10-K and in its other SEC filings, could cause Motorola's
actual results to differ materially from those estimated or predicted in the
forward-looking statements. Factors that may impact forward-looking statements
include, but are not limited to: (1) the Company's ability to improve
financial performance and increase market share in its Mobile Devices
business; (2) the level of demand for the Company's products; (3) the
Company's ability to introduce new products and technologies in a timely
manner; (4) the possible negative effects on the Company's business
operations, financial performance or assets as it moves forward with plans to
create two independent, publicly traded companies; (5) unexpected negative
consequences from the Company's ongoing restructuring and cost-reduction
activities; (6) the uncertainty of current economic and political conditions,
as well as the economic outlook for the telecommunications and broadband
industries; (7) the Company's ability to purchase sufficient materials, parts
and components to meet customer demand; (8) risks related to dependence on
certain key suppliers; (9) the impact on the Company's performance and
financial results from strategic acquisitions or divestitures, including those
that may occur in the future; (10) risks related to the Company's high volume
of manufacturing and sales in
About Motorola
Motorola is known around the world for innovation in communications. The
company develops technologies, products and services that make mobile
experiences possible. Our portfolio includes communications infrastructure,
enterprise mobility solutions, digital set-tops, cable modems, mobile devices
and Bluetooth accessories. Motorola is committed to delivering next generation
communication solutions to people, businesses and governments. A Fortune 100
company with global presence and impact, Motorola had sales of US
Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In millions, except per share amounts)
Three Months Ended --------------------------------- June 28, March 29, June 30, 2008 2008 2007 -------- --------- --------- Net sales $8,082 $7,448 $8,732 Costs of sales 5,757 5,303 6,279 -------- --------- --------- Gross margin 2,325 2,145 2,453 -------- --------- ---------
Selling, general and administrative expenses 1,115 1,183 1,296 Research and development expenditures 1,048 1,054 1,115 Separation-related transaction costs 20 - - Other charges (income) 56 94 103 Intangibles amortization and IPR&D 81 83 97 -------- --------- --------- Operating earnings (loss) 5 (269) (158) -------- --------- ---------
Other income (expense): Interest income (expense), net (10) (2) 32 Gains on sales of investments and businesses, net 39 19 5 Other (85) (9) 17 -------- --------- --------- Total other income (expense) (56) 8 54 -------- --------- --------- Loss from continuing operations before income taxes (51) (261) (104)
Income tax benefit (55) (67) (66) -------- --------- --------- Earnings (loss) from continuing operations 4 (194) (38)
Earnings from discontinued operations, net of tax - - 10 -------- --------- ---------
Net earnings (loss) $4 $(194) $(28) -------- --------- ---------
Earnings (loss) per common share -------------------------------- Basic: Continuing operations $0.00 $(0.09) $(0.02) Discontinued operations - - 0.01 -------- --------- --------- $0.00 $(0.09) $(0.01) ======== ========= =========
Diluted: Continuing operations $0.00 $(0.09) $(0.02) Discontinued operations - - 0.01 -------- --------- --------- $0.00 $(0.09) $(0.01) ======== ========= =========
Weighted average common shares outstanding ------------------------------ Basic 2,262.6 2,257.0 2,296.3 Diluted 2,269.5 2,257.0 2,296.3
Dividends paid per share $0.05 $0.05 $0.05 -------- --------- ---------
Percentage of Net Sales* --------------------------------- Net sales 100% 100% 100% Costs of sales 71.2% 71.2% 71.9% -------- --------- --------- Gross margin 28.8% 28.8% 28.1% -------- --------- ---------
Selling, general and administrative expenses 13.8% 15.9% 14.8% Research and development expenditures 13.0% 14.2% 12.8% Separation-related transaction costs 0.2% 0.0% 0.0% Other charges (income) 0.7% 1.3% 1.2% Intangibles amortization and IPR&D 1.0% 1.1% 1.1% -------- --------- --------- Operating earnings (loss) 0.1% -3.6% -1.8% -------- --------- ---------
Other income (expense): Interest income (expense), net -0.1% 0.0% 0.4% Gains on sales of investments and businesses, net 0.5% 0.3% 0.1% Other -1.1% -0.1% 0.2% -------- --------- --------- Total other income (expense) -0.7% 0.1% 0.6% -------- --------- --------- Loss from continuing operations before income taxes -0.6% -3.5% -1.2% Income tax benefit -0.7% -0.9% -0.8% -------- --------- --------- Earnings (loss) from continuing operations 0.0% -2.6% -0.4%
Earnings from discontinued operations, net of tax 0.0% 0.0% 0.1% -------- --------- ---------
Net earnings (loss) 0.0% -2.6% -0.3% -------- --------- ---------
* Percents may not add up due to rounding
Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In millions, except per share amounts)
Six Months Ended -------------------------- June 28, June 30, 2008 2007 -------- -------- Net sales $15,530 $18,165 Costs of sales 11,060 13,258 -------- -------- Gross margin 4,470 4,907 -------- --------
Selling, general and administrative expenses 2,298 2,609 Research and development expenditures 2,102 2,232 Separation-related transaction costs 20 - Other charges (income) 150 303 Intangibles amortization and IPR&D 164 287 -------- -------- Operating loss (264) (524) -------- --------
Other income (expense): Interest income (expense), net (12) 73 Gains on sales of investments and businesses, net 58 4 Other (94) 16 -------- -------- Total other income (expense) (48) 93 -------- -------- Loss from continuing operations before income taxes (312) (431) Income tax benefit (122) (175) -------- -------- Loss from continuing operations (190) (256)
Earnings from discontinued operations, net of tax - 47 -------- --------
Net loss $(190) $(209) -------- --------
Earnings (loss) per common share -------------------------------- Basic: Continuing operations $(0.08) $(0.11) Discontinued operations - 0.02 -------- -------- $(0.08) $(0.09) ======== ========
Diluted: Continuing operations $(0.08) $(0.11) Discontinued operations - 0.02 -------- -------- $(0.08) $(0.09) ======== ========
Weighted average common shares outstanding ------------------------------ Basic 2,260.5 2,337.1 Diluted 2,260.5 2,337.1
Dividends paid per share $0.10 $0.10
Percentage of Net Sales* -------------------------- Net sales 100% 100% Costs of sales 71.2% 73.0% -------- -------- Gross margin 28.8% 27.0% -------- --------
Selling, general and administrative expenses 14.8% 14.4% Research and development expenditures 13.5% 12.3% Separation-related transaction costs 0.1% 0.0% Other charges (income) 1.0% 1.7% Intangibles amortization and IPR&D 1.1% 1.6% -------- -------- Operating loss -1.7% -2.9% -------- --------
Other income (expense): Interest income (expense), net -0.1% 0.4% Gains on sales of investments and businesses, net 0.4% 0.0% Other -0.6% 0.1% -------- -------- Total other income (expense) -0.3% 0.5% -------- -------- Loss from continuing operations before income taxes -2.0% -2.4% Income tax benefit -0.8% -1.0% -------- -------- Loss from continuing operations -1.2% -1.4%
Earnings from discontinued operations, net of tax 0.0% 0.3% -------- --------
Net loss -1.2% -1.2% -------- --------
* Percents may not add up due to rounding
Motorola, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In millions)
June 28, March 29, June 30, 2008 2008 2007 -------- --------- --------- Assets Cash and cash equivalents $2,757 $2,693 $2,770 Sigma Fund 3,856 3,890 4,858 Short-term investments 595 465 1,063 Accounts receivable, net 4,495 4,770 5,492 Inventories, net 2,758 2,941 3,016 Deferred income taxes 1,882 1,951 1,930 Other current assets 3,876 3,773 2,680 -------- --------- --------- Total current assets 20,219 20,483 21,809 -------- --------- ---------
Property, plant and equipment, net 2,575 2,577 2,586 Sigma Fund 555 673 - Investments 746 801 952 Deferred income taxes 3,074 2,679 2,157 Goodwill 4,358 4,517 4,589 Other assets 2,212 2,403 2,520 -------- --------- --------- Total assets $33,739 $34,133 $34,613 ======== ========= =========
Liabilities and Stockholders' Equity Notes payable and current portion of long-term debt $145 $174 $1,775 Accounts payable 3,806 3,660 3,493 Accrued liabilities 7,623 7,942 7,608 -------- --------- --------- Total current liabilities 11,574 11,776 12,876 -------- --------- ---------
Long-term debt 3,971 4,074 2,590 Other liabilities 2,990 3,103 4,184
Stockholders' equity 15,204 15,180 14,963 -------- --------- ---------
Total liabilities and stockholders' equity $33,739 $34,133 $34,613 -------- --------- ---------
Financial Ratios*: Days Sales Outstanding (including net Long-term receivables) 50 58 57 Cash Conversion Cycle 34 46 50 ROIC 3% 3% 13% Net Cash $3,647 $3,473 $4,326
* Defined in the Financial Ratios Definitions table
Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions)
Three Months Ended --------------------------------- June 28, March 29, June 30, 2008 2008 2007 -------- --------- --------- Operating Net earnings (loss) $4 $(194) $(28) Less: Earnings from discontinued operations - - 10 -------- --------- --------- Earnings (loss) from continuing operations 4 (194) (38) Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by (used for) operating activities: Depreciation and amortization 212 204 227 Deferred income taxes (192) (278) (194) Other, net 166 58 99 Changes in operating assets and liabilities, net 14 (133) (129) -------- --------- --------- Net cash provided by (used for) operating activities from continuing operations 204 (343) (35) -------- --------- --------- Investing Acquisitions and investments, net (34) (140) (106) Proceeds from sales of investments and businesses 132 21 11 Capital expenditures (120) (111) (178) Proceeds from sales of Sigma Fund investments, net 156 631 559 Other, net (130) 152 (243) -------- --------- --------- Net cash provided by investing activities from continuing operations 4 553 43 -------- --------- --------- Financing Issuance of common stock 76 6 166 Purchase of common stock - (138) - Other, net (146) (283) (144) -------- --------- --------- Net cash provided by (used for) financing activities from continuing operations (70) (415) 22 -------- --------- --------- Effect of exchange rate changes on cash and cash equivalents from continuing operations (74) 146 3 Net cash provided by (used for) discontinued operations - - - -------- --------- ---------
Net increase (decrease) in cash and cash equivalents 64 (59) 33 Cash and cash equivalents, beginning of period 2,693 2,752 2,737 -------- --------- --------- Cash and cash equivalents, end of period $2,757 $2,693 $2,770 -------- --------- ---------
Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions)
Six Months Ended -------------------------- June 28, June 30, 2008 2007 -------- -------- Operating Net loss $(190) $(209) Less: Earnings from discontinued operations - 47 -------- -------- Loss from continuing operations (190) (256) Adjustments to reconcile loss from continuing operations to net cash used for operating activities: Depreciation and amortization 416 446 Deferred income taxes (470) (375) Other, net 224 285 Changes in operating assets and liabilities, net (119) (127) -------- -------- Net cash used for operating activities from continuing operations (139) (27) -------- -------- Investing Acquisitions and investments, net (174) (4,237) Proceeds from sales of investments and businesses 153 61 Capital expenditures (231) (270) Proceeds from sales of Sigma Fund investments, net 787 7,346 Other, net 22 (370) -------- -------- Net cash provided by investing activities from continuing operations 557 2,530 -------- -------- Financing Issuance of common stock 82 212 Purchase of common stock (138) (2,360) Other, net (429) (359) -------- -------- Net cash used for financing activities from continuing operations (485) (2,507) -------- -------- Effect of exchange rate changes on cash and cash equivalents from continuing operations 72 (42) Net cash provided by (used for) discontinued operations - - -------- --------
Net increase (decrease) in cash and cash equivalents 5 (46) Cash and cash equivalents, beginning of period 2,752 2,816 -------- -------- Cash and cash equivalents, end of period $2,757 $2,770 -------- --------
Motorola, Inc. and Subsidiaries Segment Information (In millions)
Summarized below are the Company's Net sales by reportable business segment for the three and six months ended June 28, 2008 and June 30, 2007.
Net Sales -------------------------------------- Three Months Three Months % Change Ended Ended from June 28, 2008 June 30, 2007 2007 ------------- ------------- --------
Mobile Devices $3,334 $4,273 -22% Home and Networks Mobility 2,738 2,564 7% Enterprise Mobility Solutions 2,042 1,920 6% ------------- ------------- -------- Segment Totals 8,114 8,757 -7% Other and Eliminations (32) (25) 28% ------------- ------------- -------- Company Totals $8,082 $8,732 -7% ============= ============= ========
Net Sales -------------------------------------- Six Months Six Months % Change Ended Ended from June 28, 2008 June 30, 2007 2007 ------------- ------------- --------
Mobile Devices $6,633 $9,681 -31% Home and Networks Mobility 5,121 4,901 4% Enterprise Mobility Solutions 3,848 3,637 6% ------------- ------------- -------- Segment Totals 15,602 18,219 -14% Other and Eliminations (72) (54) 33% ------------- ------------- -------- Company Totals $15,530 $18,165 -15% ============= ============= ========
Motorola, Inc. and Subsidiaries Segment Information (In millions)
Summarized below are the Company's Operating earnings (loss) by reportable business segment for the three and six months ended June 28, 2008 and June 30, 2007.
Operating Earnings (Loss) -------------------------------------- Three Months Ended Three Months Ended June 28, 2008 June 30, 2007 ------------------ ------------------
Mobile Devices $(346) $(332) Home and Networks Mobility 245 191 Enterprise Mobility Solutions 377 303 ------------------ ------------------
Segment Totals 276 162 Other and Eliminations (271) (320) ------------------ ------------------ Company Totals $5 $(158) ================== ==================
Operating Earnings (Loss) -------------------------------------- Six Months Ended Six Months Ended June 28, 2008 June 30, 2007 ------------------ ------------------
Mobile Devices $(764) $(565) Home and Networks Mobility 398 358 Enterprise Mobility Solutions 627 434 ------------------ ------------------ Segment Totals 261 227 Other and Eliminations (525) (751) ------------------ ------------------ Company Totals $(264) $(524) ================== ==================
Motorola, Inc. and Subsidiaries Financial Ratios Definitions
Net Cash
Net Cash = Cash and cash equivalents + Sigma Fund (current and non-current) + Short-term investments - Note payable and current portion of long-term debt - Long-term Debt
Cash Conversion Cycle
Cash Conversion Cycle = DSO + DIO - DPO
Days sales outstanding (DSO) = (Accounts receivable + Long-term receivables) / (Three months of Net sales / 90)
Days sales in inventory (DSI) = Inventory / (Three months of Cost of sales / 90)
Days payable outstanding (DPO) = Accounts payable / (Three months of Cost of sales / 90)
Return on Invested Capital (ROIC)
(12 mth rolling Operating earnings (loss) excluding highlighted items and including Foreign currency gain/(loss)) tax affected Rolling ---------------------------------------------------- ROIC = 4 quarter average of (Stockholders' equity + Total debt* - Excess cash**)
* Total debt = Note payable and current portion of long-term debt + Long-term Debt ** Excess cash = Rolling 4 quarter average of (Cash and cash equivalents + Sigma Fund (current and non-current) + Short-term investments) - 5% of rolling Net sales
SOURCE Motorola, Inc.
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