What is Motorola Mobility worth?

What is Motorola Mobility worth?

Google paid $40 (£24.52) a share for Motorola Mobility, exceeding its share price on Friday 12 August by 63%. The price reflects the urgency with which Google wanted to buy the company, as despite growing revenues Motorola posted an operating loss for the first half of 2011.

Motorola announced its Q2 and half yearly results on 28 July 2011, which showed that the company had grown its revenues by 25% to $6.36 billion (£3.88bn) from $5.08bn (£3.10bn) in the first half of 2010. However, it made an operating loss in the first half of 2011 of $59 million (£36m), compared with a loss of $56m (£34.1m) in the same period of 2010.

The Mobile Devices division is the main revenue earner for the company. In the first half of 2011 net sales were worth $4.55bn (£2.77bn), a rise of 35% on 2010’s $3,36bn (£2.05bn). The Home division, comprising TV set-top boxes and video solutions, made sales of $1.81bn (£1.10bn), up 5% on 2010.

The Home division is the only part of the company making a profit. In the first half of 2011 its operating profit was $115m (£70.1m) up 135% on 2010’s total of $49m (£29.9m). The Devices division on the other hand is pulling the company into the red. Losses in the six months to 2 July 2011 were $174m (£106.2m) compared with a loss of $105m (£64m) in the half year before.

In Q2, revenues for the devices division grew by 41% to $2.4bn (£1.46bn) up from Q1’s total of $1.7bn (£1.03bn), but revenues switched from an operating profit in Q1 of $87m (£53.1m), to a loss of $85m (£51.8m) in Q2.

The company said the growth in revenue was largely driven by sales in Latin America and China, where sales more than doubled year on year. In Q2, the company shipped a total of 11 million mobile devices (8.3 million devices and 2.7 million smartphones in Q2 2010), including 4.4 million smartphones and 440,000 Motorola XOOM tablets.

According to analyst Gartner, Motorola was the eighth largest manufacturer in the world in Q2 with a 2.4% share of the market, up from 2.1% in Q1.

Dominic Sunnebo, consumer insight director – global at Kantar Worldpanel ComTech, said of the Google acquisition: ‘It is a real shot in the arm for Motorola who, despite holding a strong share in the US, has struggled to make any real progress in the smartphone market in Europe – holding just 3.6% share of Android customers in the big five markets of Germany, GB, France, Italy and Spain. 

‘In the US, Motorola’s share has been edging down, with increasingly strong competition from HTC, Samsung and, more recently, Asian based OEMs such as ZTE. This can be seen in the most recent sales figures from the US which show that Motorola accounts for 24% of Android sales in the last 12 weeks to 10 July 2011, which is a significant drop from the overall share of 30.8% it holds for all Android customers,’ said Sunnebo.  

Written by Mobile Today
Mobile Today

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