Motorola (NYSE: MOT) is starting to see a light at the end of the tunnel. The Schaumburg, Ill.-based handset maker shipped 3.8 million smartphones in the third quarter, representing a 40 percent increase over the previous quarter to beat analyst expectations. It also said today that third-quarter sales were up year-over-year, marking the company’s first growth period since fourth quarter of 2006. In early afternoon trading, investors rewarded Motorola by pushing its stock up 41 cents, or 5 percent, to trade at $8.50 a share.
The company’s phone division introduced 22 smartphones this year, and with the help of hits such Android devices as the Droid X and the Droid 2, it eked out its first non-GAAP operating profit for the first time in three years, which was not expected until the busy fourth quarter. In all it shipped 9.1 million devices, which is fewer than the 13.6 million shipped in the year-ago period. However, of those phones shipped in Q3, 3.8 million were smartphones, compared to so few last year that Motorola didn’t break out the figure. Another good sigh: the average selling price of phones increased to $223 from $207 in the second quarter, driven by smartphones, which continue to account for half of total sales.
The company’s revenues rose 6 percent to $5.8 billion in Q3, and reported net income of $109 million, or 5 cents a share. Excluding items, Motorola would have earned 16 cents a share. Analysts expected 11 cents, and were estimating revenue of $5.65 billion, according to consensus forecasts from FactSet Research.
However, the company’s finances will change somewhat dramatically once the sale of its networking equipment division is completed. It agreed to sell off the division to Nokia (NYSE: NOK) Siemens in July for $1.2 billion. That deal is expected to close late this year. In the quarter, revenues from continuing operations — excluding the networking division — totaled $4.9 billion, and its EPS would have hit break even.
The company says it expects non-GAAP earnings in the fourth quarter from continuing operations between 14 and 16 cents a share. More details in the full release here, and in the earnings presentation here.