First, the not-so-good news, then on to some encouraging revenue numbers for Motorola.
Below I’ve condensed today’s big economic news as reported by the Associated Press, with the second quarter gross domestic product numbers coming in less than expected . . .
-- Economic growth clocked in at a 1.9 percent pace in the second quarter. That was better than a 0.9 percent pace logged in the first quarter, but was still considered a subpar performance and fell short of economists' forecasts.
-- Consumers boosted spending at a 1.5 percent growth rate in the second quarter, helped by the government's tax rebates. That was up from a 0.9 percent pace in the prior period.
-- Exports grew at a 9.2 percent pace, aided by a weaker value of the U.S. dollar, which makes U.S. goods cheaper to foreign buyers. That was even better than the 5.1 percent growth rate in the first quarter.
-- The economy contracted by 0.2 percent in the final quarter of last year, the worst showing since the last recession in 2001. The government previously estimated the economy had grown by 0.6 percent for that period.
On the tech front, Motorola offered up some good news today, reporting a nice profit and steady market share numbers. The profit was only $4 million, but it was better than most analysts had expected. Better yet, it stems a year-long tide of revenues losses and weak sales for Motorola. Revenue was $8.08 billion, down from $8.73 billion. That bettered expectations of $7.5 billion in revenue, Motorola reports.
Surprisingly, it wasn’t handsets that carried the day – actually handset sales were off by $340 million, a little bit better than the $347 million the company lost last quarter. Analysts point to a lack of attention-getting cell phones from Motorola that can compete with the iPhone, the Blackberry, and Samsung’s Instinct. Motorola hasn’t had a cell phone hit since the Razor, which was released in 2004. A big chunk of revenues came from Motorola’s Home and Networks Mobility division, which brought in $2.7 billion for the quarter. Another $2 billion came from the company’s Enterprise Mobility division.
My big problem with Motorola is that it depends heavily on North Ameican sales for its products – especially its cell phones. 48% of all sales comes from America, Motorola reports. With consumers tightening their belts that number isn’t going to rise, at least significantly. Only 14% of sales went to Asia – a number that has to rise if investors are expected to jump in with both feet.
Motorola CEO Greg Brown admits as much, telling analysts the company expects sales to decline in the third quarter as Motorola continues to lose market share abroad.
He also said that Motorola is planning to release some new handsets featuring touch screens and smart phone capabilities by the end of 2008.
Altogether, not a bad quarter for Motorola. But the rest of 2008 doesn’t look as promising.