This summary is based on the third quarter fiscal 2007 earnings call conducted by Motorola, Inc. (MOT) on October 25, 2007.
Management:
President and Chief Operating Officer: Greg Brown
Chairman and Chief Executive Officer: Ed Zander
Corporate Vice President of Investors Relations: Dean Lindroth
Chief Financial Officer: Tom Meredith
Key Investors Issues
- EPS were 3 cents a share compared to 39 cents a share last year.
- Net profit was $60 million compared to $968 million a year earlier.
- Sales declined 17% to $8.8 billion.
Third Quarter Highlights
Sales were $8.8 billion, down 17 versus last year, and up 1% as compared to the second quarter.
The year-on-year sales decline is all attributable to the mobile devices segment.
On a GAAP business the company had earnings from continuing operations of 2 cents per share compared to earnings from continuing operations of 29 cents per share last year.
The third quarter GAAP results include highlighted items of 40 cents per share for charges associated with announced workforce reductions and a write down of intangible assets.
- Earnings per share excluding highlighted items were 6 cents per share.
- Growth margin percentage for the company increased sequentially by 80 basis points. This increase is primarily a result of the sequential gross margin improvement in Mobile Devices.
- Operating expenses for the company declined by approximately $100 million compared to the second quarter as a result of progress on restructuring efforts.
OpEx came down sequentially in all segments.
The increase in gross margin percentage and improvement in operating expenses, resulted in an operating profit of $169 million, up from the $32 million operating loss reported last quarter.
- Total other income was $18 million compared to $54 million last quarter.
- Operating cash flow was approximately $342 million and positive in all three business segments. This reflects improving operating results in Mobile Devices and seven-day improvement in overall cash conversion cycle.
- Net cash was $4.2 billion, down compared to last quarter due largely to acquisitions, share repurchases, payment of dividends and capital expenditures.
The company used $115 million to repurchase approximately seven million shares at an average cost of $16.90 per share.
- To date, approximately $7.2 billion of $11.5 billion share repurchase program has been completed. The company has repurchased approximately 351 million shares which represents 14% of the outstanding shares in May 2005 when the first share repurchase program was initiated.
- Cash conversion cycle at quarter-end was 42 compared to 50 days in the second quarter. The seven-day reduction was led by improvement Mobile Devices which ended the third quarter at 37 days, 12 days better than last quarter.
- Enterprise Mobility Solutions was 47 days, a six-day improvement.
- The inventory was essentially flat compared to the second quarter and days inventory on hand or DIOs remained essentially unchanged at 43 days while accounts payable DPOs showed a slight improvement.
In Mobile Devices sales were $4.5 billion on volume of 37.2 million units and sequential increase in ASPs.
- Estimated market share was about 13%.
- Excluding highlighted items, the operating loss was $138 million.
- North America and Latin America continue to be the largest regions accounting for 49% and 22% of sales respectively.
- EMEA and Asia-Pac both of which remain challenging represent 14% and 15% of sales respectively.
