Zander Hire Is Paying Off at Motorola

Finance chief Dave Devonshire, summarizing the company's financial turnaround, pointed out that Motorola is now "net cash positive for the first time in 35 years." That's to say the company's cash position is at last larger than its debt obligations.

In handsets, the average selling price rose 12% sequentially, showing that the company is selling more expensive phones.

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Indeed, Motorola and Korean rival Samsung both cashed in this quarter on midprice camera phones. That's a model consumers were clamoring for but one that sector leader Nokia failed to produce. The camera-phone slip-up at Nokia has pared a third of its shares' value this month, following a pair of earnings warnings.

By contrast, Motorola said personal communications segment sales surged 67% from a year ago, to $4.1 billion. Operating earnings more than tripled to $398 million.

During the quarter, Motorola shipped 25.3 million handsets, up 51% from the year-ago quarter, and improved its market share, particularly in Europe. The segment also announced 25 new handsets, 24 featuring color displays and 16 featuring integrated cameras.

That said, industry analysts note that Nokia has all but declared a price war to regain its sliding market share. But Motorola executives on the conference call pointed out that more than two of every three phones sold in the latest quarter were color camera models, an area where Nokia was weak.

Asked if they were vulnerable to a Nokia price war, the executives said their sales "guidance speaks for itself. It's a market that's looking at functionality" in cellphones.

The company bounced back on the handset front after shipping delays and supplier shortages sabotaged Motorola's color camera phone sales last winter.

Motorola also boosted second-quarter earnings guidance, saying the company would make around 16 cents a share on some $8.4 billion in revenue. Analysts had forecast earnings of 9 cents on revenue of $6.9 billion.

Notably, Motorola announced in December that it would spin off its chip business, which is to be called Freescale Semiconductor.

On Tuesday, Motorola slipped 50 cents to $16.20.

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