Motorola Q3 results hit by product delays and price cuts

Motorola Q3 results hit by product delays and price cuts

Motorola Mobility is warning that its third quarter profit will fall short of expectations.

The manufacturer said the shortfall was driven by delays to its high-speed Bionic smartphone and XOOM tablet and price cuts to its tablet range after slow sales.

The company gave a third quarter earnings target ranging from break-even to 10 cents per share, excluding unusual items, compared with analyst expectations for 24 cents a share.

The manufacturer’s full year forecast for 2011 of 48 cents to 60 cents per share missed Wall Street expectations for 71 cents per share.

Chief executive Sanjay Jha revealed that the launch of Motorola's Bionic smartphone will be delayed yet again. The launch of the device, which was announced at the Consumer Electronics Show in January this year, had already been delayed to the summer from a spring launch and will now not launch in the US until September.

The high speed version of the Motorola XOOM, also announced in January, is also facing delays until September, Motorola revealed.

Gross profit margins have also been impacted by Motorola’s decision to slash the cost of its Motorola XOOM tablet in the US from $499 to $799 this month in order to compete with Apple’s iPad and Samsung’s Galaxy Tab.

Motorola cut the price of the XOOM at Verizon Wireless to $499 from $799 on 25 July to compete with the iPad and tablets like the Galaxy Tab as consumers weren't willing to pay a premium for the Motorola device, which like Galaxy is based on Android software from Google Inc.

The company launched the XOOM at Verizon Wireless on 24 February.

Jha said Motorola had misjudged pricing but pledged that Motorola’s profits would be back on track in the fourth quarter, with more competitive products, including two more tablets.

He said: ‘We now recognise where the price points are. For the fourth quarter we'll launch very good, new tablets and we'll have a good quarter.’

Motorola's full year forecast for 2011 of 48 cents to 60 cents per share missed Wall Street expectations for 71 cents per share.

For the second quarter, it reported a loss of $56 million, or 19 cents per share, compared with a profit of $80 million, or 27 cents per share, a year earlier.

However, it was not all bad news. Excluding unusual items, Motorola earned 9 cents per share in Q2, ahead of analyst expectations for 6 cents a share.

Revenue also rose to $3.3 billion, beating the average analyst estimate of $3.12 billion.

The manufacturer also said it had shipped 4.4 million smartphones in the quarter, in line with analyst expectations. It has also sold 440,000 tablet computers, ahead of analyst expectations for about 366,000.

Written by Mobile Today
Mobile Today

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