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Telecommunications equipment industry

Motorola's Profit Quadruples in Third Quarter, Exceeding Analysts' Expectations

Strategic Insights

— 1 min read

Motorola's profit and revenue have seen a significant surge in the third quarter, with the company's profit more than quadrupling and revenue jumping 26 percent compared to the same period last year. The company's strong sales of its new handsets have been a major factor in this growth, with the introduction of new higher-speed networks in the US, Europe, and Asia driving demand for the devices. Motorola's new chief executive, Ed Zander, has also implemented cost-cutting measures and streamlined the company's development process, resulting in a profit margin above 10 percent for the first time in over a dozen years.

Key Takeaways:

  • Motorola's profit more than quadrupled in the third quarter, reaching $479 million, or 20 cents a share, compared to $166 million, or 5 cents a share, in the same period last year.
  • Revenue jumped 26 percent to $8.62 billion, compared to $6.83 billion in 2003.
  • Motorola expects profit and revenue to grow in the fourth quarter compared to the same period last year.
  • The company's new chief executive, Ed Zander, has cut development costs and sped up the introduction of new phones, resulting in a profit margin above 10 percent for the first time in over a dozen years.
  • Motorola is benefiting from growing demand for handsets that work on new higher-speed networks being introduced by carriers in the US, Europe, and Asia.
  • The company is taking advantage of slower growth at Nokia, the world's largest handset maker, whose market share is about twice as large as Motorola's.
  • Competition in the market remains fierce, with Nokia showing signs of recovering from its sales slump and smaller rivals like Samsung and LG making inroads into overseas markets.

Statistics:

  • Profit more than quadrupled to $479 million in the third quarter, compared to $166 million in 2003.
  • Revenue jumped 26 percent to $8.62 billion, compared to $6.83 billion in 2003.
  • Profit margin rose above 10 percent, the first time in over a dozen years.
  • Motorola expects to grow sales by 16-20 percent in the fourth quarter, to as much as $9.6 billion.
  • The company expects profit of between 23 and 26 cents a share, compared to 20 cents a share in 2003.

Sources:

  • Motorola's third-quarter earnings report (no date specified)
  • Bloomberg News (quote from Ed Zander)
  • The Yankee Group, a market research firm (quote from John Jackson)

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