Motorola Mobility Announces Fourth-Quarter and Full-Year 2010 Financial Results
LIBERTYVILLE, Ill., Jan. 26, 2011 /PRNewswire/ --
Fourth Quarter Financial Highlights
- Revenues of $3.4 billion, up 21 percent from fourth quarter 2009
- GAAP earnings of $0.27 per share; non-GAAP earnings of $0.37 per share
- Mobile Devices net revenues of $2.4 billion, up 33 percent from fourth quarter 2009; shipped 4.9 million smartphones; GAAP operating earnings of $72 million; non-GAAP operating earnings of $56 million
- Home net revenues of $1.0 billion; GAAP operating earnings of $54 million; non-GAAP operating earnings of $90 million
- Operating cash flow generation of $225 million
Click here for printable press release and financial tables.
Motorola Mobility Holdings, Inc. (NYSE: MMI) today reported net revenues of $3.4 billion in the fourth quarter of 2010, up 21 percent from the fourth quarter of 2009. The GAAP earnings in the fourth quarter of 2010 were $80 million, or $0.27 per share, compared to a loss of $204 million, or $0.69 per share, in the fourth quarter of 2009. On a non-GAAP basis, earnings in the fourth quarter of 2010 were $108 million, or $0.37 per share, compared to a loss of $70 million, or $0.24 per share, in the fourth quarter of 2009.
For the full year, 2010 net revenues were $11.5 billion, up 4 percent compared to 2009. For the full year, the GAAP loss was reduced to $0.29 per share from a loss of $4.56 per share in 2009. On a non-GAAP basis, the loss was reduced to $0.28 per share from a loss of $2.95 per share in 2009.
Details on non-GAAP adjustments and the use of non-GAAP measures are included later in this press release and in the financial tables.
The Company generated positive operating cash flow of $225 million and $606 million in the quarter and full year, respectively. As planned, subsequent to the end of the quarter, the Company received $3.2 billion in cash related to its separation from Motorola, Inc.
"The improvement in our financial results last year, including profitability in the fourth quarter, is indicative of the progress we have made in delivering innovative smartphones and improving the Mobile Devices business," said Sanjay Jha, chairman and chief executive officer of Motorola Mobility. "Our Home business performed well and remains a premier provider of digital set-tops and end-to-end video solutions. With the global opportunities ahead, along with our diversified portfolio, our brand, and our people, we are well positioned to grow, and further improve our financial results in 2011."
Mobile Devices segment net revenues in the fourth quarter were $2.4 billion, up 33 percent compared with the year-ago quarter. GAAP operating earnings were $72 million compared to an operating loss of $166 million in the year-ago quarter. Non-GAAP operating earnings were $56 million compared to an operating loss of $117 million in the year-ago quarter. For the full year 2010, net revenues were $7.8 billion, an increase of 9 percent compared to 2009. The 2010 GAAP operating loss was reduced to $76 million from an operating loss of $1.2 billion in 2009. The 2010 non-GAAP operating loss was reduced to $198 million from an operating loss of $923 million in 2009.
The Company shipped 4.9 million and 13.7 million smartphones in the quarter and full year, respectively, compared to 2.0 million in the fourth quarter and full year 2009. The Company shipped total handsets (including smartphones) of 11.3 million and 37.3 million in the quarter and full year 2010, respectively.
Mobile Devices highlights:
- Launched seven new smartphones in the fourth quarter, including the DROID PRO, DROID 2 Global, Motorola DEFY™, and Motorola BRAVO™, bringing our total smartphone launches for the year to 23.
- In the first quarter 2011, announced three new smartphones and the Company's first tablet which are garnering numerous accolades. Products include:
- Motorola ATRIX™ 4G, winner of CNET's Best Smartphone at CES (Consumer Electronics Show) award, featuring a dual-core processor, qHD pentile display and Motorola Mobility's proprietary webtop application that powers an ecosystem of accessories, enabling users to have an enhanced and more interactive computer-like experience with their device.
- Named "Best of Show" at CES 2011, Motorola XOOM™ is the first device to incorporate Android 3.0 Honeycomb, Google's powerful new operating system developed specifically for tablets; XOOM features a dual-core processor and high-definition 10.1 inch widescreen display.
- DROID™ BIONIC features a sleek design, and delivers the fastest mobile Internet experience with 4G LTE speeds that are up to 10 times faster than current 3G speeds.
- Motorola CLIQ 2™ with MOTOBLUR™, the follow-up to Motorola Mobility's first smartphone, features a 3.7-inch touch-screen display, a 1GHz processor and a new slide-out QWERTY keypad.
- Acquired Zecter, Inc., a leading start-up with synchronization and streaming technologies for on-demand digital media consumption.
Home segment net revenues in the fourth quarter were $1.0 billion, up 1 percent compared with the year-ago quarter. GAAP operating earnings were $54 million, compared to an operating loss of $30 million in the year-ago quarter. Non-GAAP operating earnings increased to $90 million from $71 million in the year-ago quarter. For the full year 2010, net revenues were $3.6 billion, compared to $3.9 billion in 2009. GAAP operating earnings increased to $152 million from $11 million in 2009. The 2010 non-GAAP operating earnings increased to $272 million from $197 million in 2009.
- Increased shipments of DVR set-tops reflecting consumer desire for personalized viewing experiences.
- Acquired 4Home, a leading provider of managed home solutions, to expand our cloud-based Motorola Medios service management software portfolio.
- Launched RX48 CMTS module, the industry's highest-density upstream DOCSIS solution.
- Launched a next-generation IP set-top for the EMEA market, extending our leadership position in IPTV.
First-Quarter 2011 Outlook
The Company's outlook for the first quarter of 2011 is the following:
- Consolidated operating earnings in a range around breakeven
- Non-operating costs of approximately $10 million
- Income tax provision of approximately $25 million
- Net loss of $26 million to $62 million
- Net loss per share of $0.09 to $0.21
- Basic shares outstanding of approximately 294 million shares
- Excludes charges associated with items of the variety typically highlighted by the Company in its quarterly earnings results, stock-based compensation expense and intangible assets amortization expense
Consolidated GAAP Results
A comparison of results from operations is as follows:
(In millions, except per share amounts)
Operating earnings (loss)
Earnings (loss) before income taxes
Net earnings (loss) attributable to Motorola Mobility Holdings, Inc.
Basic earnings (loss) per common share*
Basic weighted average common shares outstanding*
Non-GAAP Adjustments (Highlighted Items, Stock-based Compensation Expense and Intangible Assets Amortization Expense)
The table below includes highlighted items, stock-based compensation expense and intangible assets amortization expense for the fourth quarter of 2010.
GAAP Earnings per Common Share*
Reorganization of business charges
Joint venture wind-down costs
Total Highlighted Items
Stock-based compensation expense
Intangible assets amortization expense
Stock-based Compensation Expense and
Intangible Assets Amortization Expense
Total Non-GAAP Adjustments **
Non-GAAP Earnings per Common Share *
*The computation of basic earnings (loss) per share for all periods through December 31, 2010, is calculated using the number of shares of Motorola Mobility Holdings, Inc. common stock outstanding on January 4, 2011, following the distribution of one share of Motorola Mobility Holdings, Inc. common stock for every eight shares of Motorola, Inc. common stock. No measure of diluted earnings (loss) per share is presented.
**Earnings per share (EPS) impact may not add up due to rounding.
Conference Call and Webcast
Motorola Mobility will host its quarterly conference call beginning at 5:30 p.m. (U.S. Eastern Time) on Wednesday, January 26. The conference call will be webcast live with audio and slides at investors.motorola.com.
Use of Non-GAAP Financial Information
In addition to the GAAP results included in this presentation, Motorola Mobility also has included non-GAAP measurements of results. Motorola Mobility has provided these non-GAAP measurements to help investors better understand Motorola Mobility's core operating performance, enhance comparisons of Motorola Mobility's core operating performance from period to period and allow better comparisons of Motorola Mobility's operating performance to that of its competitors. Among other things, the Company's management uses these operating results, excluding the identified items, to evaluate the performance of its businesses and to evaluate results relative to certain incentive compensation targets. Management uses operating results excluding these items because it believes this measurement enables it to make better period-to-period evaluations of the financial performance of its core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and the Company compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP.
Highlighted items: The Company has excluded the effects of highlighted items (and any reversals of highlighted items recorded in prior periods) from its non-GAAP operating expenses and net income measurements because the Company believes that these historical items do not reflect expected future operating earnings or expenses and do not contribute to a meaningful evaluation of the Company's current operating performance or comparisons to the Company's past operating performance.
Stock-based compensation expense: The Company has excluded stock-based compensation expense from its non-GAAP operating expenses and net income measurements. Although stock-based compensation is a key incentive offered to our employees and the Company believes such compensation contributed to the revenue earned during the periods presented and also believes it will contribute to the generation of future period revenues - the Company continues to evaluate its performance excluding stock-based compensation expense primarily because it represents a significant non-cash expense. Stock-based compensation expense will recur in future periods.
Intangible assets amortization expense: The Company has excluded intangible assets amortization expense from its non-GAAP operating expenses and net income measurements, primarily because it represents a significant non-cash expense and because the Company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the Company's acquisitions. Investors should note that the use of intangible assets contributed to the Company's revenues earned during the periods presented and will contribute to the Company's future period revenues as well. Intangible assets amortization expense will recur in future periods. Details of the above items and reconciliations of the non-GAAP measurements to the corresponding GAAP measurements can be found at the end of this press release.
Motorola Mobility cautions the reader that the risk factors below, as well as those on pages 13 through 36 in the Information Statement included in the Company's Registration Statement on Form 10 and in its other SEC filings available for free on the SEC's website at www.sec.gov and on Motorola Mobility's website at investors.motorola.com, could cause the Company's actual results to differ materially from those estimated or predicted in the forward-looking statements. Such forward-looking statements include, but are not limited to, statements about future financial performance, and the Company's financial outlook for the first quarter of 2011. Many of these risks and uncertainties cannot be controlled by the Company and factors that may impact forward-looking statements include, but are not limited to: (1) possible negative effects on the Company's business operations, financial performance or assets as a result of becoming an independent, publicly traded company, which may include: (i) diminished purchasing leverage and increased exposure to market fluctuations as a result of being a smaller, more focused company, and (ii) potential negative consequences of licensing certain logos, trademarks, trade names and service marks, including "MOTOROLA" to Motorola Solutions, Inc.; (2) the economic outlook for the telecommunications and broadband industries; (3) the Company's ability to improve the financial performance in its Mobile Devices business, including the success of its smartphone strategy; (4) Mobile Devices' dependency on third-party operating systems and software, including Google's Android operating system; (5) the level of demand for the Company's products, particularly if customers defer purchases in response to tighter credit; (6) the Company's ability to introduce new products and technologies in a timely manner; (7) unexpected negative consequences from the restructuring and cost reductions; (8) negative impact on the Company's business from global economic conditions and uncertainties; (9) the Company's ability to purchase sufficient materials, parts and components to meet customer demand; (10) risks related to dependence on certain key suppliers; (11) the impact on the Company's performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (12) risks related to the Company's high volume of manufacturing in Asia and business operations in foreign countries, including Brazil; (13) variability in income received from licensing the Company's intellectual property to others, as well as expenses incurred when the Company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of a strengthening U.S. dollar on the Company when competing for business in foreign markets; (16) the impact on the Company from ongoing consolidation in the telecommunications and broadband industries; (17) the impact of changes in governmental policies, laws or regulations; (18) the outcome of currently ongoing and future tax matters; and (19) negative consequences from the Company's outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola Mobility undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.
About Motorola Mobility
Motorola Mobility Holdings, Inc. (NYSE: MMI) fuses innovative technology with human insights to create experiences that simplify, connect and enrich people's lives. Our portfolio includes converged mobile devices such as smartphones and tablets; wireless accessories; end-to-end video and data delivery; and management solutions, including set-tops and data-access devices. For more information, visit motorola.com/mobility.
MOTOROLA and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC. All other trademarks are the property of their respective owners. © 2011 Motorola Mobility, Inc. All rights reserved.