Earnings: Motorola Q307 Net Earnings Of $60 Million As It Struggles To Get Back On Track

After some major cost cuts and the introduction of new selection of phones to follow up on the RAZR success, Motorola (NYSE: MOT) today reported $60 million in net earnings on the back of $8.8 billion in sales; this is an improvement on the net loss of $28 million posted in Q207. However, the Q307 figure is still down hugely from the earnings of $968 million in Q306, and key divisions like handsets are still struggling.

Handset sales: These totalled $4.5 billion, down 36 percent over a year ago; the segment had an operating loss of $138 million, compared with operating earnings of $843 million in the year-ago quarter. The RAZR was Motorola’s shining light, selling some 100 million units, but in Q207 its market share dropped to 14 percent from 22 percent in the same period a year ago, according to Bloomberg, and Motorola now says it’s dropped again to 13 percent.

— The follow-up RAZR 2 has sold 900,000 units; and mobile sales overall totalled 37.2 million units. Motorola continues to have a challenge ahead in presenting compelling products in light of advances from new and incumbent handset makers like Apple, RIM, Nokia (NYSE: NOK) and Samsung.

Future services: Motorola has said it wants to build on success it’s had in individual markets — for example it is planning to expand the successful music service it launched in China; it also wants to launch a content portal — and it is also investing in functionality like mobile banking and user interfaces.

Cost-cutting: Zander has laid off 5,100 people so far in 2007 and plans to axe another 2,800; it’s also cut its R&D budget by 15 percent. There’s been a big upheaval in management this year, with Greg Brown, once head of the networks and enterprise business, now president; Thomas *Meredith* (ex-Dell) hired as finance chief; and Stu Reed now leading the handset unit, having been in charge of the vendor’s supply chain. But the biggest change of all may still be to come: vocal shareholder Carl Icahn may once again renew his calls for CEO Ed Zander’s head on a plate.

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