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Motorola Profit Rises on Handset Sales

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From Associated Press

Motorola Inc. rode strong sales of its 20 new cellphones to a 34% increase in fourth-quarter profit, capping a resurgent year under new Chief Executive Ed Zander.

Both earnings and sales reported Tuesday by the world’s second-largest handset maker handily outpaced Wall Street’s expectations.

Net income for the last three months of 2004 was $654 million, or 27 cents a share, compared with $489 million, or 20 cents, a year earlier.

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Excluding results from discontinued operations -- the money-losing chip business it spun off into Freescale Semiconductor Inc. last month -- earnings were 28 cents a share. That was 4 cents better than the consensus estimate of analysts surveyed by Thomson First Call.

Revenue rose 27% to $8.84 billion, easily topping the $8.46 billion predicted by analysts. A year earlier, revenue was $6.94 billion.

Zander cited an “enthusiastic” reception to the new portfolio of products launched by the Schaumburg, Ill.-based company -- particularly its much-advertised, ultra-thin Razr handset, which he said “greatly exceeded sales expectations.”

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He said Motorola picked up about 3 percentage points of market share in the quarter, solidifying its No. 2 position behind Nokia and giving it a 5-point lead over No. 3 Samsung Electronics Co.

Analysts have said Motorola and Nokia appear to have gained at the expense of Samsung, where profit fell 2% in the fourth quarter as it was slow to get new handsets to market.

The cellphone unit, by far Motorola’s biggest business, posted operating earnings of $526 million on sales of $4.9 billion -- up an impressive 51% from a year earlier.

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The company said it shipped 31.8 million handsets in the fourth quarter, up 42%.

For the full year, Motorola had a profit of $1.54 billion, or 64 cents a share, up 72% from $893 million, or 38 cents, a year earlier. Revenue climbed 35% to $31.3 billion.

Motorola shares were down 3.3% in after-hours trading after closing up 40 cents at $17.43 on the New York Stock Exchange in anticipation of superior results.

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