Motorola Earnings: Phone Maker Beats Estimates, Raises Third-Quarter Outlook

Motorola (MOT) reported a second-quarter performance that beat Wall Street's earnings expectations on the strength of mobile device sales to large corporations, and issued a third-quarter forecast that was higher than analysts' expectations. Motorola's stock climbed 2.6% to $7.88 a share in premarket trading Thursday.

Motorola, which has struggled since its 2005 Razor debut to find its next big hit, touted the strong sales of its recently released Droid X phone, which sold out in its first day of sales. The profits from that performance are expected to show up when Motorola reports its third-quarter results in the fall.

"The Droid X launch has been very well received and [it] is seen as one of the best smartphones in the market today with a 4.3 inch high-resolution display, Adobe flash and an 8 megapixel camera. As we continue to execute on our business strategy, we are in a strong position to continue improving our share in the rapidly growing smartphone market and improving our operating performance," said Sanjay Jha, co-CEO and head of Motorola Mobility, in a statement.

Motorola said it expects to pull in earnings of 10 to 12 cents a share in the third quarter. Wall Street was expecting the low end of that range, looking at 10 cents a share, according to Thomson Reuters.

New ES400 PDA Proves Popular for Businesses

For the quarter just completed, Motorola reported sales of $5.4 billion, a decline of 1.5% over last year. A dip in sales of its mobile devices pulled that performance down by 6% to $1.7 billion in the quarter. Mobile sales to corporate customers, however, rose 10% to $1.9 billion as its newly introduced ES400 personal digital assistant gained traction.

Motorola's second-quarter net income rose to $162 million, or 7 cents a share, a substantial increase over last year's net profits of $26 million. When excluding tax-related adjustments, Motorola posted second-quarter net profits of 9 cents a share, beating Wall Street estimates of 8 cents.

"In the second quarter, our Enterprise Mobility Solutions and Networks businesses continued to deliver best-in-class market leadership and financial returns, with strong operating earnings and excellent cash generation," said Greg Brown, Motorola co-CEO and head of Motorola Solutions, in a statement.

While mobile device sales to corporate customers performed well, network sales dropped 2% to $967 million in the quarter. Motorola recently announced the sale of the majority of its network business to Nokia Siemens Networks for $1.2 billion.