Yesterday after the closing bell, Motorola Mobility Holdings Inc. (MMI) reported its first-quarter 2011 financial results, beating the Zacks Consensus Estimates. Moreover, management provided an improved financial guidance for the ensuing second quarter of 2011. As a result, in the after market trade in NYSE, stock price of Motorola Mobility went up by 96 cents (4%) to $24.95.
Quarterly total revenue was $3,032 million, up 22.3% year over year. Quarterly GAAP net loss was $81 million or 27 cents per share compared with a net loss of $212 million or 72 cents per share in the prior-year quarter. However, first-quarter 2011 adjusted (excluding special items) EPS was a loss of 22 cents, much better than the Zacks Consensus Estimate of a loss of 26 cents.
Gross margin, in the first quarter, was 24.9% compared with 24% in the prior-year quarter. Quarterly operating loss was $36 million compared with an operating loss of $172 million in the year-ago quarter.
During the first quarter of 2011, Motorola Mobility generated $107 million of cash from operations compared with $26 million in the prior-year quarter. Free cash flow (cash flow from operations less capital expenditure) in the reported quarter was $57 million compared with $7 million in the year-ago quarter. Cash and cash equivalents at the end of the first quarter of 2011 was $3,116 million. The balance sheet of Motorola Mobility remains debt free.
Mobile Devices Segment
Quarterly revenue was $2,128 million, up by 30% year over year. Operating loss, on a GAAP basis, was $89 million compared with an operating loss of $192 million in the year-ago quarter.
During the first quarter of 2011, Motorola Mobility shipped 9.3 million mobile phones including 4.1 million of smartphones. This is a considerable improvement over the shipment of 2.3 million smartphones in the prior-year quarter. Furthermore, Motorola Mobility Shipped more than 250,000 XOOM tablets in the reported quarter.
In the last quarter, Motorola Mobility witnesses competition in the North American market as Verizon Wireless (VZ), its major carrier partner, started selling CDMA iPhone 4 of Apple Inc. (AAPL). However, strong smartphone sales in China and Brazil helped the company to offset losses in North America. In order to reduce its dependence on Verizon, Motorola Mobility has decided to concentrate more on the European region including German, France, and the U.K. Management remains confident that smartphone shipment and top line of the Mobile Devices segment will increase sequentially.
Home Segment
Quarterly revenue was $904 million, up 8% year over year. GAAP operating income was $53 million compared with an operating income of $20 million in the year-ago quarter. Significant improvement in operating income was mainly attributable to increased shipment of DVR set-top boxes.
Future Financial Outlook
Motorola Mobility is expecting net earnings of breakeven to $35 million in the second quarter of 2011. EPS will be a breakeven to 12 cents. As per management, the second quarter revenue will improve sequentially.
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