Despite solid sales, Motorola posted an overall net loss for the second quarter due to charges related to other matters, including the spin-off of its semiconductor division.
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The company reported a second-quarter net income loss of $203m (£110), compared with $119m for the same period a year ago. Net sales came in at $8.7bn, up 41% from $6.2bn in the same quarter last year, Motorola said.
Sales in the company's mobile telephone division, which it calls its personal communications segment, increased by 67% to $3.9bn, compared to the same quarter last year. The division's operating earnings came in at $394m, compared with $91m in the second quarter of last year.
Motorola's improved sales figures are in contrast to market leader Nokia, which last week reported a 5% decline in net sales for its second quarter and warned of a further decline in sales in the current quarter, despite robust sales across the sector as a whole.
The Finnish mobile phone manufacturer, which has been struggling with updating its product line, faces increased competition from Motorola, Samsung Electronics and Sony Ericsson Mobile Communications. Last week, South Korean Samsung reported its year-on-year sales for the quarter were up by 52%, while London-based Sony Ericsson posted a 34% increase in sales compared to the same quarter last year.
Motorola credited its sales recovery to an "improving product portfolio", pointing out that in the second quarter it had begun shipping 17 new handsets, seven of which feature integrated cameras and nine that come in the popular clamshell style. The company shipped 24.1 million handsets in the period, up 52% from the second quarter of last year, and experienced market gains particularly in Latin America and Europe, it said.
Due to its semiconductor unit, Freescale Semiconductor, Motorola took a tax expense of $898m related to costs associated with its plans for an initial public offering for the company later this year. Motorola reported sales in the semiconductor product division of $1.5bn, up 31% compared with the quarter a year ago, due mainly to the segment's wireless and networking markets.
Other Motorola product divisions also reported increased sales figures for the quarter, including its mobile telephony networks; its division for commercial, government and industrial solutions, which included a $329m multi-year contract with the Commonwealth of Virginia for its Tetra multi-agency radio system; its integrated electronic systems division, which grew on the strength of its automotive electronics business; and its broadband communications division, which began shipping a high-definition dual tuner set-top box.
The company forecast third-quarter sales of between $8.4bn and $8.8bn, an increase of approximately 25% to 30% compared to the third quarter of 2003. Analysts are forecasting third quarter sales of $8.46bn and fourth quarter sales of $9.44bn.
Motorola also announced that the president of its mobile phone division, Tom Lynch, who is also an executive vice-president of Motorola, is leaving the company at the end of August for "personal reasons". Motorola has yet to name his replacement.
Laura Rohde writes for IDG News Service