Motorola sells more phones, makes less money

Jan 19 2007 - 04:43 PM ET | Motorola

motorola logoAs expected, Motorola announced disappointing financial numbers for the fourth quarter. It wasn't for the lack of handset sales though, Motorola sold a record 65.7m phones in the quarter. The Chicago based company reported a 17% surge in revenue but a 48% drop in net income. Motorola's main trouble was tumbling handset prices, the average price for a Motorola phone in the fourth quarter was a scant $119. The profit margin of Motorola's phone business fell a dramatic 49% versus a year ago and means that Motorola only recorded about $5 of profit for every handset it sold. This comes at the same time as an analyst report that half of Apple's new $500 iPhone is profit.

Ed Zander, Motorola's CEO, announced a plan to cut 3,500 jobs which should save the company $400m over the next two years. Zander noted to analysts that the company is ramping up its 3G lineup and expects handset prices to move upward in 2007. The published first quarter estimate is strong, calling for sales between $10.4 and $10.6 billion.