Motorola stunned Wall Street and shareholders with its strongest quarter in years, riding the success of its new cell phones and other products to a sales resurgence that spurred an after-hours run on its stock.
After failing to deliver on past predictions of a comeback, Motorola finally posted some eye-opening numbers Tuesday, more than tripling its first-quarter profits to $609 million and reporting revenues nearly $2 billion higher than forecast.
The earnings report drove Motorola shares up more than 20 per cent to $19.51 in unusually heavy after-hours trading after briefly topping $20 a level not seen since early 2001.
New CEO Mr Ed Zander, the former Sun Microsystems president who took charge of the Schaumburg, Ill., company on January 5th, benefited from momentum that began building late last year under his predecessor, Christopher Galvin. Motorola's recovery also coincides with sharply improved outlooks for the wireless infrastructure and semiconductor markets it is dependent upon.
The company outlined another big quarter ahead as its camera phones and other recently introduced handsets catch hold, generating what it said could be another sales gain of as much as 40 percent over the previous year's quarter. Motorola also cited improved execution in delivering the new products.
The company's main competitor in cell phones, its No. 1 business, is Finland's Nokia, which recently lowered forecasts for the second quarter amid increased competition from its American and Asian rivals.
Motorola's recent success has whacked 7 or 8 percentage points off Nokia's lead in the global cell-phone market, according to SoundView Technology Corp., an Old Greenwich, Conn.-based stock research firm which pegs Motorola's share at 17 percent and Nokia at 30 per cent or 31 per cent. That's down from a 35-17 gap at the end of 2003.