Thursday, October 29, 2009
Motorola, Profit No Longer Mutually Exclusive
Motorola’s ambitious turnaround strategy is beginning to pay off. Posting earnings this morning, the company said it managed a surprise profit in the third quarter, despite a decline in revenue. For the period, the troubled handset maker reported a profit of $12 million, or a penny a share, compared with a year-earlier loss of $397 million, or 18 cents a share. Sales fell 28 percent to $5.45 billion from $7.48 billion. Not the prettiest of quarters, but that penny-a-share profit beat the consensus estimates of analysts, who had expected the company to simply break even.
Verizon uncrated its latest iPhone challenger Wednesday morning, introducing the new $199 Motorola Droid, and it already has analysts buzzing about the life it may breathe back into Motorola, whose share of the phone market dropped by nearly half in the second quarter from 10 percent a year earlier.
Though eBay reported a 29 percent drop in profit for its third quarter Wednesday, the company did deliver revenue that was reasonably higher than Wall Street’s expectations. Not that it mattered much. Investors took eBay out to the woodshed anyway, beating its shares down seven percent in after-hours trading.
Looks like AMD has benefited from the same favorable PC updraft that’s lifting Intel. On Thursday, the chip maker reported a narrower third-quarter loss than expected, thanks to “strong demand” for its microprocessors and graphics chips. 
Though its shares are up more than 900 percent since January, Palm remains a “show me” story. So says Susquehanna Financial analyst Jeffrey Fidicaro, who seems to think the Street is putting a bit too much faith in the company’s next-generation platform, webOS, and the devices that run on it.
Motorola is getting a bit of long lost love from Wall Street today, now that it has unveiled the CLIQ–the Android-powered handset with which it hopes to regain market share in the intensely competitive cellphone business. Shares in the company spiked more than seven percent after the CLIQ announcement Thursday, and today they’re up well over six percent. 
During its post-earnings conference call last Thursday, Palm refused to say how many Pre handsets have been sold to date. Or how many it believes it will sell in the first quarter of production. The company would say only, in the words of CEO Jon Rubinstein, that “sales have been strong and growing.” So until Palm provides specific Pre sales figures, we have only the estimates of analysts with which to gauge the device’s impact on Palm’s moribund smartphone franchise. And the latest estimates, from Edward Snyder at Charter Equity Research, suggest that the impact is great.
A quick but noteworthy follow-up to my earlier post about the incredible gain in market cap Palm made in the last year. Palm’s valuation is actually higher than the $1.95 billion I quoted earlier. Quite a bit higher, it turns out.
Quite a legacy Philip Schoonover built over at Circuit City, eh? He announces his resignation as chairman and CEO and, bang, the company’s stock spikes almost 10 percent in extended trading. Seems leaving Circuit City was the best thing Schoonover has done for the struggling consumer electronics retailer since he accepted the CEO gig in 2006.
Yahoo’s attempts to rally shareholders in advance of its annual meeting on Aug. 1 are going about as well as its attempts to rally its business. Which is to say, not well at all. 
