Motorola Announces Second-Quarter Sales and Earnings

Second-Quarter Highlights

* Sales of $8.7 billion

* GAAP net loss from continuing operations of $0.02 per share, including net charges of $0.04 per share from highlighted items

* Handset shipments of 35.5 million units, including shipment of the 100 millionth RAZR and initial shipments of the new RAZR2 and the multimedia MOTO Z8

* Home & Networks Mobility sales of $2.6 billion, an increase of 9 percent compared to last year

* Enterprise Mobility Solutions sales of $1.9 billion, an increase of 42 percent compared to last year, reflecting continued strong results from the Symbol business acquired in January 2007


SCHAUMBURG, Ill.– Motorola, Inc. (NYSE: MOT) today reported sales of $8.7 billion for the second quarter of 2007. The GAAP net loss from continuing operations for the second quarter of 2007 was $0.02 per share, which includes net charges of $0.04 per share related to workforce reductions and an insurance litigation matter.

“This was a challenging quarter for Motorola in which revenue fell short of our expectations due to a decline in mobile device unit shipments,” said Ed Zander, chairman and chief executive officer. “However, I am pleased with the solid results within our Home and Networks Mobility and Enterprise Mobility Solutions businesses. Our vision of seamless mobility and the mobile Internet continues to resonate with our customers and partners worldwide. We remain confident that we are taking the right steps to deliver improved performance and to create long-term value for Motorola shareholders.”

“Our efforts are focused on improving cash flow from operations and enhancing profitability,” said Tom Meredith, chief financial officer. “In addition to cost controls and headcount reductions, which we expect will result in cost savings of $1 billion in 2008, we intend to significantly improve our cash conversion cycle and our return on invested capital.”

Operating Results

Mobile Devices segment sales were $4.3 billion, down 40 percent compared with the year-ago quarter. Excluding highlighted items, the segment incurred an operating loss of $264 million, compared with operating earnings of $804 million in the year-ago quarter. Lower sales and earnings are attributable to lower overall unit volumes, particularly in Asia, and the Europe, Middle East and Africa region. Motorola’s share of the global handset market for the quarter is estimated to be 13.5%.

During the quarter, Mobile Devices:

* Shipped 35.5 million handsets, with continued leadership in North America and Latin America
* Shipped the 100 millionth RAZR
* Began shipping several new products, including the EV-DO RAZR2, the Q9, the MOTO Z8 and the Linux/Java platform-based GSM RAZR2 and ROKR Z6
* Earned recognition by J.D. Power and Associates for the highest rating in a U.S. consumer satisfaction survey for mobile phones, citing strengths in design, operation and features


“We are committed to improving the performance of the Mobile Devices business. We announced strong new leadership, began shipping a number of new products, and are implementing aggressive cost controls,” said Greg Brown, president and chief operating officer.

Home and Networks Mobility, which includes the newly combined Connected Home Solutions and Networks businesses, had segment sales of $2.6 billion, up 9 percent compared with the year-ago quarter. Excluding highlighted items, operating earnings were $207 million, compared with operating earnings of $246 million in the year-ago quarter.

During the quarter, Home and Networks Mobility:

* Had strong demand for high-end HD DVR and IPTV devices, as well as the new digital cable host products
* Announced plans to acquire Terayon Communication Solutions
* Continued its momentum in mobile broadband with WiMax


Enterprise Mobility Solutions, which includes the company’s two enterprise businesses – Government and Public Safety and Enterprise Mobility, had segment sales of $1.9 billion, up 42 percent compared with the year-ago quarter. Excluding highlighted items, operating earnings were $302 million, compared with operating earnings of $252 million in the year-ago quarter.

During the quarter, Enterprise Mobility Solutions:

* Won a new country-wide Public Safety contract in Denmark
* Saw strong demand for enterprise products globally, particularly in EMEA and Asia Pacific
* Continued to gain momentum and realize cost synergies from the Symbol acquisition


Outlook

The company’s outlook for earnings per share from continuing operations in the third quarter is flat to slightly up compared to second quarter earnings from continuing operations excluding highlighted items. This outlook excludes any reorganization of business charges associated with the company’s operating expense reduction initiatives, as well as any other items of the variety highlighted by the company in its quarterly earnings releases. While the company does not expect the Mobile Devices business to be profitable for the full year, it does expect its financial results to improve in the second half of the year.