New York: Motorola Inc reported a surprise quarterly profit, as sales of its smartphones using Google Inc’s Android software were better than expected.
Shares of the cellphone maker jumped 8% in premarket trading, helped by Motorola’s current-quarter forecast which indicated that earnings per share could beat average analysts’ estimates.
While overall phone sales declined at Motorola in the first quarter, analysts were impressed with improved sales of its Android phones, such as the Droid. Motorola had reorganized its mobile devices line to focus on the Google software.
The results come the morning after Hewlett-Packard Co said it will buy smartphone maker Palm Inc, potentially heating up competition for Motorola.
Avian Securities analyst Matthew Thornton said Motorola’s first-quarter profit was especially good news after a weak report from handset market leader Nokia last week.
“It was a good quarter in the face of cautious expectations,” he said, adding that Motorola’s cash generation of $455 million was a good sign ahead of its plan to separate into two companies early next year.
“The smartphone numbers look good and the profitability looks good and they generated nice cash,” he said.
Motorola posted a first quarter profit of $69 million, or 3 cents per share, compared with a loss of $231 million, or 10 cents a share, in the same quarter the year before.
Excluding items, profit per share was 2 cents compared with average analyst expectations for a loss of 1 cent per share, according to Thomson Reuters.
Revenue fell 6% from a year earlier to $5.04 billion, and compared with the average forecast of $5.098 billion.
The company said sales of smartphones rose to 2.3 million from 2 million in the fourth quarter, when it was helped by its Droid phone, which is sold at Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc.
Overall, Motorola sold 8.5 million phones, short of the expectations for 10.2 million from nine analysts contacted by Reuters, and 14.7 million phone sales in the same quarter a year earlier.
Motorola forecast current quarter earnings per share of 3 cents to 5 cents per share, including expenses for stock-based compensation and amortization of intangibles. That compares to the average Street forecast of 3 cents per share according to Thomson Reuters.
Motorola shares rose 8% to $7.46 in premarket trading.