Motorola Inc. posted net income of $515 million on sales of $9.25 billion in the second quarter, up from $269 million on $7.59 billion a year earlier.
Earnings per share rose by 10 cents, to 23 cents, compared with the year-ago quarter. Net margins on sales also increased, to 5.6 percent from 3.5 percent.
Robert L. Growney, president and chief operating officer, said July 13 that the company is “particularly pleased” by the performance of its Broadband Communications and Network Systems segments.
He also cited “excellent sales growth and profit improvement in the Semiconductor Products Segment and … good progress in addressing the profitability issues experienced by the Personal Communications Segment in the first quarter.”
Following the release of the second quarter results, Marc Cabi, a managing director for Credit Suisse First Boston, San Francisco, raised his recommendation on Motorola stock to “buy” from “hold.”
“In handsets, operating margins saw better-than-expected improvements, to 4 percent vs. our estimate of 3.1 percent,” Cabi said.
“Revenue growth was light at 19.5 percent year-over-year, although we are encouraged by management’s decision to hold back on low-end handset shipments until new models are launched in the second half.”
Motorola said its Personal Communication Segment, which comprises end-user devices, experienced a sales increase of 20 percent to $3.3 billion, while orders declined by less than 1 percent to $3.1 billion. Operating profits rose to $132 million, a $7 million increase, while operating profit margins doubled to 4 percent.
The CS First Boston analyst termed the results from Motorola’s Network Systems Segment “a surprise performance,” the partial result of improved economic conditions in China. However, Cabi said he remains cautious with respect to third-generation wireless infrastructure contracts, “given the pattern of awards to date.”
Motorola reported that sales in the Network Systems Segment increased by 24 percent to $2 billion and orders by 37 percent to $2.1 billion. Operating profits rose to $256 million from $169 million.
Cabi also attributed “strong industry demand trends” for the strong and better-than-expected growth in the company’s Semiconductor Products and Broadband Communications segments.
Motorola announced its semiconductor products sales rose by 27 percent to $2 billion, while orders increased by 31 percent to $2.2 billion. Operating profits followed a steeper trajectory, rising to $166 million from $24 million a year earlier.
Likewise, Broadband Communications sales increased by 23 percent, to $768 million, and orders by 28 percent, to $900 million. Operating profits reached $129 million from $78 million a year ago.
