Motorola Mobility, the phone maker Google has agreed to buy for $12.5bn, swung to an operating loss last quarter due to increased competition in the smartphone market.
Like other smartphone makers that rely on Google’s Android operating system, Motorola Mobility has struggled to differentiate its products from other Android handsets and compete against rivals, notably Apple’s iPhone 4S in the fourth quarter of 2011.
The company sold a total of 10.5m mobile devices in the fourth quarter, including 5.3m smartphones powered by Android, and about 200,000 Zoom PC tablets.
Motorola Mobility’s core mobile devices business reported net revenues of $2.5bn, up 5 per cent over the same quarter a year earlier, but it noted that revenues were impacted by higher competition. The mobile business recorded an operating loss of $70m compared to an operating profit of $72m a year earlier.
Despite the setback, Sanjay Jha, chairman and chief executive officer, said, “In the fourth quarter, we received very positive consumer response to Motorola Razr, which combined an iconic brand with ultra-thin in an innovative smartphone.”
Overall, the company which also sells set top boxes through its home business unit, reported a fourth quarter net operating loss of $80m, or 27 cents a share, compared to a net profit of $80m or 27 cents a share in the 2010 quarter. Total revenues were flat at $3.4bn.
The company generated positive operating cash flow of $225m and $357m in the fourth quarter and full year, respectively. Total cash at the end of the quarter was $3.6bn.
Mr Jha said, “We remain energised by the proposed merger with Google and continue to focus on creating innovative technologies.” The deal is currently awaiting approval from regulatory authorities in Europe.