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Motorola Q2 Profit Jumps despite Lower Sales

Motorola, the world’s fourth largest cell phone maker, has reported an unexpected boost in profit for the second quarter of 2009, beating analysts’ and its own forecasts. However, this is a result of deep cost cuts rather than an increase in sales and revenues.

For the quarter ended on July 4 2009, Motorola shipped 14.8 million handsets, up slightly from 14.7 million in the first quarter, but down from the 28 million units it sold a year ago. While sales continued to decline from last year, the company has managed to post earnings for the second quarter. Its net profit reached $26 million, reporting a drastic jump compared with $4 million for the same quarter in 2008. The surge is mainly contributed by its cost-cutting strategies since last year, which involved 8,000 layoffs so far this year.

Motorola has been suffering from a slide in sales over the past couple of years. Facing new and competitive rivals like iPhone maker Apple and BlackBerry maker Research In Motion, the company has failed to introduce a device that could beat the smartphones or match its own popular RAZR series back in 2004. Although Motorola tried to get into the smartphone market by introducing some running Windows Mobile software years ago, there was no great acclaim, and yet it is not giving up.

Sanjay Jha, co-CEO of Motorola and CEO of Mobile Devices said in a statement that by the holiday season, the company will bring two Android phones to market through two U.S. carrier and multiple carriers overseas. Together, it is planning to launch 34 new handsets in the third and forth quarters, almost twice the number of new phones it launched in the first half. "We are also excited about our 2010 portfolio and are pleased with the customer feedback", he added.

For the third quarter, the company forecasts result ranging from a loss of 1 US cent per to a profit of 1 US cent a share. Jha also said he expects the cell phone unit to break even next year. So let us wait and see what Motorola will come up with, and whether it can bring back its glory days.

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