Motorola's fall from the global Top 5 cell phone vendor list-following a strong first quarter 2010 for BlackBerry maker Research In Motion, which rose to knock Motorola out-didn't bode well for the handset maker. On April 29, however, the Illinois-based company reported strong first-quarter sales, indicating a battle for smartphone market share is ahead.
Motorola's first-quarter sales totaled $5 billion, with earnings of $69 million, compared with a GAAP loss from continuing operations of $291 million a year earlier. Smartphone shipments totaled 2.3 million handsets, while total handsets hit 8.5 million units.
"We continue to execute on our business strategy, build momentum in smartphones and improve our operating performance," Motorola CEO Sanjay Jha said in a statement. "During the quarter, we increased smartphone shipments sequentially and introduced six new devices. We are in a strong position to improve our share in the rapidly growing smartphone market, particularly in light of our competitive portfolio, strengthened brand and improved carrier relationships."
All six new devices-the Backflip, Cliq XT, Devour, XT701, MT710 and XT800-run Google's Android mobile operating system, which has contributed significantly to its sales success. According to analysts, Motorola is becoming a clear leader in Android handsets.
"With Google now backing away from its own -branded phone' and HP taking itself out of the Android game with its Palm purchase, we see Motorola emerging as the leading Android vendor, followed by HTC and Samsung, both with hybrid strategies as the next closest followers," Broadpoint AmTech analyst Mark McKechnie wrote in an April 30 research note. "While competition is accelerating, we view Android and Google as an extremely fast innovator, and are encouraged by Motorola's strategy."
Motorola's first Android handset, the Motorola Droid, saw a strong initial response-with 1.05 million units selling in the device's first 74 days on the market, a timeframe milestone established by Apple, which in 2007 took that many days to sell 1 million iPhone. (Google, by contrast, sold only 135,000 of its self-branded phone, the Nexus One, in the first 74 days.)
Since then, Droid sales have only increased, with Verizon Wireless, the Droid's exclusive U.S. provider, announcing April 22 that it sold more Droid handsets in the first quarter of 2010 than during the device's holiday-timed arrival in the fourth quarter of 2009.
Broadpoint AmTech's McKechnie writes that while Motorola missed its forecast of 9.4 million units, it beat the firm's Android forecast, shipping 2.3 million Android devices, versus the forecast 1.9 million.
"For June, Motorola expects Android units up [quarter over quarter]-we have kept June at 2.5 million units-with feature phones down slightly," McKechnie wrote. "Motorola now expects 12 to 14 million Android units for the year-up from 11 to 14 million-plus expects handsets [to be] profitable in Q4, and remains on track for a [first-quarter 2011] split."
He continued, "This quarter's results reinforce our view that Android will be successful and Motorola will be a leading player."
Motorola additionally performed well in its Home business (which saw sales of $838 million, following operating earnings of $20 million), its Enterprise Mobility Solutions business (with sales of $1.7 billion, with earnings of $141 million) and its Networks business (with sales of $896 million, with earnings of $112 million).
"Our Enterprise Mobility Solutions and Networks businesses performed very well during the quarter, delivering strong operating earnings and excellent cash generation," Motorola co-CEO Greg Brown said in a statement. "These businesses continue to deliver best-in-class market leadership and financial returns."