Motorola Expects Home Segment Sales To Fall 7% In 2010


Motorola's Home sales are expected to fall 7% versus 2009, although the company expects the cable-centric group to become more profitable thanks to "a favorable product mix" and cost reductions.

Sales in the Home segment, which includes digital set-tops, DVRs, cable modems and other video equipment, were $886 million for the quarter ended July 3, down 13% from the year-earlier period. But the group's operating earnings were $29 million, up from $18 million in the second quarter of 2009.

Sanjay Jha, CEO of Motorola Mobility -- which comprises mobile devices and the Home group -- told analysts on the earnings call Thursday that Home sales for the full year now are expected to decline by approximately 7%, which is at the "top end" of the company's previous guidance.

However, Jha said, operating margin for the group is expected to increase "driven by a favorable product mix and improvement in the cost structure."

In the second quarter, Motorola's sales of video and access infrastructure were up sequentially and up "double digits" year-over-year, accounting for more than 25% of total Home sales, Jha said.

Mobile Devices segment sales were $1.7 billion, down 6% year over year, while operating earnings totaled $87 million (which included income from a significant legal settlement of $228 million) versus an operating loss of $287 million in the year-ago quarter. It shipped 8.3 million handsets in the second quarter, including 2.7 million smartphones, the Google-based Droid device among them.

Overall, Motorola reported sales of $5.41 billion for the second quarter -- down 1.5% from the year-ago quarter -- while net income jumped more than sixfold, to $162 million ($0.07 per share).

Last week, Motorola announced an agreement to sell the majority of its wireless-infrastructure business to Nokia Siemens Networks in a deal valued at $1.2 billion.

Motorola plans to split into two entities in the first quarter of 2011: Motorola Mobility, headed by Jha; and Motorola Solutions, made up of its enterprise, government and public safety business units, to be headed by Greg Brown.