Motorola Puts Its Faith in Androids

SCHAUMBURG, Ill. ( TheStreet) -- Motorola's ( MOT) cost cutting continues as the shrinking phonemaker looks ahead to a brighter Google ( GOOG) Android future.

The Schaumburg, Ill.-based tech shop says it plans to introduce two Android-powered smartphones at two phone companies in the fourth quarter. One of those phones, as TheStreet reported, will be sold by Verizon ( VZ) in time for the holiday sales season.

More than a little is riding on the Android smartphone strategy. Motorola's slice of the market, a return to profitability and, some would argue, the survival of the mobile phone business hangs in the balance.
TheStreet Hangman Challenge!
TS Hangman Game

"The devices we are planning will get us back in the game in smartphones," Co-CEO Sanjay Jha told analysts on an earnings call. The success of these phone, says Jha, will "keep us on the path to financial improvements in 2009 and 2010."

For the second quarter ended last month, Motorola posted an adjusted net loss of a penny a share, down from the 2-cent pro forma profit in the year-ago quarter and better than the 4-cent loss analysts were looking for in a Yahoo! Finance survey.

Second quarter sales were $5.5 billion down 32% from the $8.08 billion booked a year ago, and slightly below the $5.6 billion Wall Street expected.

Looking ahead, Motorola says it expects to be at a breakeven point on profits in the third quarter as the company is still in a cutting process.

Jha told analysts on the call that the company has eliminated 30% of its staff since he started last year and that he expects the penny pinching trend to continue. Jha raised his target on cuts Thursday aiming at a $1.4 billion operating expense reduction compared to the $1.3 billion prior target.

Mobile phone sales fell 45% to $1.8 billion from year-ago levels, but Motorola managed to trim its operating losses by half to $253 million from $509 million in the first quarter.

Motorola shares jumped 10% early Thursday as investors applauded the financial improvements and the upbeat update on the company's Android effort.

Jha declined to predict whether the phone unit would turn profitable in 2010, but he did say that he'd be disappointed if the company didn't turn a profit on at least a quarterly basis next year.

Analysts and investors have some concerns about Motorola's hopes being so tightly bound to the Android smartphone and the possible success of a two-phone debut at the end of the year.

The timing could hardly be more difficult as phone makers including Apple ( AAPL), Research In Motion ( RIMM) and Nokia ( NOK), to name a few, will have the newest, best devices in the same market targeted to the same group of buyers.

Jha was very aware of that point.

"The fourth quarter will be quite a battle in the marketplace," he said.

Reported by Scott Moritz in New York

More from Technology

3 Software Stocks Now Available at a Discount

3 Software Stocks Now Available at a Discount

Monday Madness: Nike Just Does It

Monday Madness: Nike Just Does It

Amazon Could Become the Next Big Player in Autonomous Driving

Amazon Could Become the Next Big Player in Autonomous Driving

Salesforce Announces Alliance with Apple Just Ahead of Dreamforce Conference

Salesforce Announces Alliance with Apple Just Ahead of Dreamforce Conference

Here's Why Tesla's In-House Body Shops Are a Big Deal

Here's Why Tesla's In-House Body Shops Are a Big Deal