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Motorola Losses Climb as Google Deal Lingers in Limbo

Motorola Losses Climb as Google Deal Lingers in Limbo

Losses were up slightly in Motorola Mobility's most recent fiscal quarter. The phone maker's Droid series of smartphones inched up during the period, but Motorola remains behind players like Samsung and Apple in the overall smartphone race. Meanwhile, Google's purchase of the company continues to drag on through round after round of regulator approval processes.

By Rachelle Dragani
05/02/12 10:38 AM PT

Motorola Mobility revealed its quarterly earnings for its first fiscal quarter of the year Tuesday, reporting a slightly higher net loss than last year.

The company lost US$86 million, or 28 cents per share, compared to $81 million, or 27 cents per share, for the same time a year ago.

Smartphone sales were slightly up. Motorola shipped 8.9 million mobile devices during the three months that ended on March 31, and 5.1 million of those were smartphones.

Its mobile device sales were helped especially by the Droid Razr Maxx, which features an extended battery life, and the Droid 4, the company said. Sales of budget-friendly smartphones such as the Motoluxe and the Defy Mini in China, Europe and Latin America have also done well.

Revenue also rose slightly, climbing from $3.03 billion a year ago to $3.08 billion -- higher than the Street expected.

Motorola Mobility didn't respond to our requests for further comment on the earnings report.

Transition Time

Motorola Mobility is in a transition period, waiting for its deal with Google to go through. Shortly after Motorola split into two companies in January of 2011 -- a home division and a mobile device division -- the search engine giant agreed to buy Motorola Mobility for $12.5 billion. U.S. and European regulators approved the deal, and it is now waiting on approval in China.

Motorola expects the deal to go through by the end of the first half of 2012.

Until then, the company faces tough competition in the crowded smartphone market. A report released Tuesday showed that Android sales are giving Apple's iPhone some tough competition, but although Motorola upped its sales for this quarter, it's not at a level to overtake anyone's spot.

Samsung trumped Nokia in sales for the first quarter of 2012, and Apple's iPhone remains in a strong second place. Nokia, RIM and HTC take over the third, fourth and fifth spots, respectively, according to a report from IDC. Motorola Mobility was not listed as one of the main spots.

If the Google purchase goes through, it will be easier to tell where Motorola Mobility could stand going forward in the smartphone race.

"I think they have a competitive smartphone offering," Hendi Susanto, analyst at Gabelli told MacNewsWorld. "But until the acquisitions close, it's still a work in progress. They've had some good execution until now, but they're really waiting for more."

Looking Forward

Overall, though, Susanto and Trip Chowdhry, senior analyst at Global Equities Research, said it's tough to gauge how well the company has been doing based on this earning period, since the company is in such a transitory state.

Google has a lot to earn from Motorola, said Chowdhry. The purchase would include a teeming patent portfolio that will help Google in the ongoing intellectual property wars going on in courtrooms worldwide.

"Google hasn't put any initiative right now into the merging of the two companies," said Chowdhry. "They talk about a joint roadmap, but the real thing they keep mentioning is the 27,000 patents that will help make it a competitor against Apple and Microsoft."

But until there is clear leadership and a solid set of goals between Google and Motorola Mobility, the latter will continue to report slight losses and remain a back runner in the smartphone race, said Chowdhry.


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