Moto: WiMax making an impact

While Motorola’s suffering handset division continues to drag on the company, Co-Chief Executive Officer Greg Brown said today the vendor was encouraged by results in the home and networks mobility division, driven in a large part by the ramping up of WiMax deployments around the world. Though mobile WiMax is still in its infancy, Moto has taken an early lead in the space, which has already had an impact on networks’ financial performance but will become an even greater contributing factor this year, Brown said.

Overall, Motorola had a dismal fourth quarter, posting a $3.6-billion loss driven by its handset division that halved the number of phones shipped a year earlier and resulted in new efforts to cut staff and reorganize the unit around a few key handset platforms. It’s enterprise mobility and home and networks mobility groups, however, painted different pictures. Enterprise Mobility—formerly Symbol Technologies—saw fourth-quarter sales increase 4% to $2.2 billion and operating earnings increase 3% to $466 million. Meanwhile, networks saw sales decline 5% to $2.6 billion but operating earnings increase from $192 million to $257 million as Moto expanded the unit’s operating margins from 7% to just under 10%. For all of 2008, networks sales were up 1% to $10.1 billion, and operating earnings rose 29% to $918 million.

“While the global economic downturn has impaired some of the industries and customers we serve, these businesses remain substantial franchises, with leadership positions in their respective markets,” said Brown, CEO of broadband mobility, which covers both the enterprise and networks groups.

In the networks group, most sales increases were driven by the home division, which saw an 11% boost in revenue, primarily from sales of digital TV set-top boxes. WiMax’s impact, however, was felt in mobile networks as a counterbalance to falling 2G equipment sales and the divestiture of Motorola’s embedded communications, which Moto sold to Emerson last year. Though Motorola didn’t break out numbers from each technology segment, Brown said sales in GSM and iDEN networks were both down in the fourth quarter but offset by sales from CDMA and wireless broadband, primarily in WiMax. In 2009, Brown said Motorola expects iDEN, GSM and CDMA sales to fall off even more but WiMax sales to increase as Clearwire and other WiMax customers expand their initial 4G deployments. Most of Motorola’s R&D efforts have now shifted away from legacy technologies to WiMax and long-term evolution (LTE), where future growth lies, Brown said.

“In GSM, CDMA and iDEN, we’ve significantly reduced our cost structure and improved margins,” Brown said. “We’ve funded R&D efforts and demonstrated leadership in both WiMax and LTE. In summary, the networks business performed very well, especially in delivering overall year-over-year operating margins improvement despite a changing sales mix and investment in next-generation technologies.”