Correction: An earlier version of this article noted Motorola (NYSE: MMI) Mobility’s revenue in “millions” not “billions”. It has now been corrected. We regret the error.
Not brilliant news for Motorola Mobility and its would-be buyer, Google: the handset maker today issued preliminary Q4 results that will fall short of market expectations, citing competition from other handset makers and costs related to patent litigation.
Motorola today said in a statement that it expects to post sales of $3.4
million billion with only “modest” profitability (the exact amount, slightly worryingly, was not specified). It estimates shipments of 10.5 million mobile devices, with 5.3 million of those smartphones. Its Home business, covering digital media technology, should bring in $900 million.
According to poll of analysts by Reuters, Moto was expected to report $3.88
million billion in revenues. The shipment numbers will be down on the 11.3 million posted for Q3, although smartphones are up compared to the 4.8 million reported for in that period.
In its release Motorola cites the “increased competitive environment” for some of the shortfall, and to be sure companies like Apple (NSDQ: AAPL) and Samsung are really killing it right now in smartphones, both in market share and, significantly, mindshare.
But turning this around, you could also argue that Moto has failed to deliver compelling enough handsets of its own. These have included the Droid Razr, the company’s first smartphone riff on its once-bestselling Razr line, a new version of its Atrix 4G device, the extended rollout of its Defy device. Motorola doesn’t specify any more on its IP litigation but it is fighting suits against Apple and Microsoft (NSDQ: MSFT), among others, not just in the U.S. but in Europe as well.
Motorola, which makes smartphones based on Google’s Android platform, is not the only Android maker reporting bad news today. HTC also today said its profits declined in the face of ongoing competition in the smartphone market. Given that Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) (soon to be only Sony) and LG (SEO: 066570), two other major Android device makers, have also had some trouble in their device businesses, it seems that the only Android partner really winning right now is Samsung, which today also reported quarterly results with a growth in revenues and profits.
While this is not great news for Motorola, it is also potentially a bother for another major company: Google (NSDQ: GOOG), which is currently in the process of buying Motorola Mobility for $12.5 billion. If the phone business is proving a challenge, and the Moto patents that Google sorely needs are costing a fortune to defend, then where, exactly, will the value be in the deal?
We may get some more color on this news next week during CES, where Motorola Mobility will have a strong presence. The company will be releasing its full Q4 earnings on January 26.