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Motorola's Connected Home Sales Up 39% in 4Q

1/19/2007 3:23 AM Eastern

Amid overall results CEO Ed Zander called disappointing -- and looming job cuts -- Motorola’s Connected Home Solutions business unit saw fourth-quarter sales increase 39% and operating profit more than double compared with the year-ago quarter, the company announced Friday.

Zander told analysts Friday that Motorola will eliminate 3,500 jobs, or about 5% of its work force, by midyear to cut costs. He said the layoffs will save the company about $400 million over two years.

In that light, Motorola’s Connected Home Solutions results were a relative bright spot. The unit’s sales were $980 million for the quarter compared with $703 million for the fourth quarter of 2005. The unit’s operating earnings were $118 million versus $52 million in the year-ago quarter.

For the full year, Connected Home Solutions sales increased 16% to $3.3 billion compared with 2005. Operating earnings increased 46% year-over-year.

The unit sells set-top boxes, cable-networking gear and video equipment.

Overall, Motorola’s net income fell 48% in the fourth quarter versus the year before. Analysts attributed the drop to lower average selling prices for the company’s mobile handsets, even as sales in that category increased 19% to $7.8 billion.

The company posted total revenues of $11.79 billion for the quarter, meeting its lowered expectations. Motorola two weeks ago said fourth-quarter results would be below its previous forecasts.

"As I said earlier this month, we are disappointed with our fourth-quarter operating-earnings performance,” Zander said in a prepared statement. “However, the company generated strong revenue growth and met or exceeded our goals in many areas during the quarter. I am confident that we remain well-positioned for continued growth and success.”

September