Motorola Inc. posted higher quarterly profit and stabilized its long revenue decline, as the company’s wager on smartphones running Google Inc.’s software began to pay off.
The Schaumburg, Ill., company sold 2.7 million smartphones in the second quarter, up from 2.3 million in the first quarter, helped by its Google-based Droid. The follow-up device, Droid X, launched July 15—after the quarter ended.
Motorola said demand for the Droid X was outstripping supply, but the company didn’t raise its forecast for smartphone sales. It maintained its goal of shipping 12 million to 14 million smartphones this year.
“We’re not missing from the marketplace, but demand is slightly higher than we anticipated,” Motorola Co-Chief Executive Sanjay Jha said in an interview. “We have managed it as well as anyone else.”
Mr. Jha said about half of Motorola’s smartphone sales go to Verizon Wireless, the exclusive carrier of the Droid lineup. He expects a return to sales growth for the cellphone unit in the third quarter, the first time in nearly four years, with profitability in the fourth quarter.
Rival HTC Corp., which is based in Taiwan, also said Thursday it is experiencing strong demand for its Google phones. It expects smartphone shipments to rise to 6.5 million units in the third quarter from 5.4 million in the second quarter.
Like the past several quarters, the bulk of Motorola’s profit came from its public-safety radio and handheld scanner business, as well as its network-equipment unit, which the company said last week it would sell to Nokia Siemens Networks for $1.2 billion. Nokia Siemens is a joint venture between Nokia Corp. and Siemens AG.
Motorola posted second-quarter earnings of $162 million, or seven cents a share, up from a year-earlier profit of $26 million, or one cent a share. Revenue fell slightly to $5.41 billion, with sales at the cellphone business down 6% to $1.7 billion.
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By Roger Cheng, The Wall Street Journal
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