Motorola pulls out small profit amid falling sales

Motorola Inc. squeezed out a small profit in the second quarter, though revenues were down sharply across the company and the mobile phone division continued to lose ground.

The Schaumburg-based company reported Thursday net income of $26 million, or 1 cent per share, up from income of $4 million in the same quarter last year. Excluding one-off items, Motorola posted a small net loss of 1 cent per share.

The company's stock traded sharply higher on the New York Stock Exchange. Shares were up more than 9 percent to $7.18 in morning trading.

Motorola has been focused on aggressive cost-cutting and expects to save $1.8 billion by year-end. The company's total headcount has been reduced by 8,000 since the end of 2008, and co-chief executive Sanjay Jha said Thursday that the workforce in mobile devices is 30 percent smaller than when he arrived last year.

Jha's focus continues to be on the fourth quarter, when Motorola will launch two smartphones powered by Google's Android platform.

"The devices we're launching in the holiday season will get us back in the game in smartphones," Jha said.

Motorola shipped 14.8 million mobile handsets during the quarter and sales totaled $1.8 billion, a decrease of 45 percent from a year earlier. The company now has a global market share of 5.5 percent.

Jha said more Android phones are coming in 2010, and that he's less concerned with regaining market share and volume than staying relevant in the smartphone segment and improving the average selling price of phones. Even so, Jha said Motorola wants to put Android into lower-priced phones as well.

"Our core strategy really is to take Android as low down on the feature-phone tier as we possibly can," he said.

The company's other two divisions remained profitable despite falling sales. Home and Networks Mobility, which produces cable set-top boxes and network infrastructure, saw revenues fall 27 percent to $2 billion. Enterprise Mobility Solutions, which makes communications equipment for government and business clients, posted $1.7 billion in sales, down 17 percent from the same quarter last year.