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Motorola Shares Drop on Report

Despite an 86% jump in profit, the cellphone maker's sales shortfall worries investors.

January 20, 2006|From Associated Press

Motorola Inc., the world's second-largest maker of cellphones, rode the continuing momentum of its hot-selling Razrs to an 86% jump in fourth-quarter income.

The earnings reported Thursday topped Wall Street estimates, but revenue and handset shipment totals came in just shy of expectations, sending shares of the Schaumburg, Ill.-based company tumbling in after-hours activity after a 3% increase during the regular trading session.

Net income for the October-through-December quarter was $1.2 billion, or 47 cents a share, up from $647 million, or 28 cents, a year earlier.

Excluding one-time items, earnings were 35 cents a share. That was a penny more than the estimate of analysts surveyed by Thomson Financial.

Revenue was $10.43 billion, up 18%, although slightly below analysts' estimates of $10.51 billion.

Motorola said it shipped 44.7 million handsets during the quarter, an increase of 40% compared with a year earlier and about 1% below analysts' estimate. It pegged its world market share at 19%, up 3% in a year.

The company said it expected first-quarter sales of $9.3 billion to $9.5 billion and earnings of 27 cents to 29 cents a share, excluding stock-option expenses of about 2 cents a share. Both those forecasts are within the range expected by analysts.

Motorola shares traded $1.33, or 5.5%, lower at $23.02 in extended-hours activity after closing up 74 cents at $24.35. The sales shortfall concerned investors already worried about earnings from technology companies such as Intel Corp. and Apple Computer Inc.

For the full year, Motorola tripled its earnings to $4.58 billion, or $1.81 a share, up from $1.53 billion, or 64 cents, in 2004. Revenue was $36.8 billion, up 18% from $31.3 billion.

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