Motorola bounces back with $26 million Q2 profit

The biggest mobile-phone maker in the US, Motorola, recovered dramatically in the second quarter, posting a modest $26 million profit, signalling the worst could be over for the telecommunications equipment maker after several quarter losses.

Qualcomm veteran, Dr Sanjay Jha, hired by Motorola as a co-CEO in August last year, (See: Motorola poaches Qualcomm CFO to head loss-making handset division) along with co-CEO Greg Brown have managed to turn the loss making company around within a year after initiating aggressive cost cutting measures, setting the stage for a comeback in the highly competitive smart phone market.

The Schaumburg, Illinois-based Motorola reported sales of $5.5 billion in the second quarter of 2009, a decline of 32 per cent or $8.1 billion compared to a year ago.

The company had sales of $1.8 billion in mobile devices by shipping 14.8 million handsets while its enterprise mobility solutions had sales of $1.7 billion.

Analysts, investors and Wall Street applauded the efforts of the two CEO's in turning the company around and end cash burning. Analysts hope that the company would fare better once the effects of the recession wear off.

Much of the turnaround has come because of the bold initiative taken by both the CEOs in cost cutting. Since 2007, Motorola has reduced its workforce by about 16,000. In January, it cut 4,000 jobs, roughly 6 per cent of its workforce, with 3,000 jobs going from the mobile-devices business. (See: Motorola to slash 4,000 jobs, equivalent to 6 per cent of workforce)

Sanjay Jha said that the workforce has been reduced by 30 per cent in mobile devices from the time he arrived a year ago and added that the company expects to cut $1.8 billion in costs by the end of the year. That figure includes $700 million of new savings on top of a previously announced plan to cut $800 million in expenses.