Analyst Conference Summary


conference date: April 18, 2007 4:30 AM Pacific Time
for quarter ending: March 31, 2007 (Q1 2007)

Forward-looking statements

Partial Summary due to connection problems.

Overview: Roughly in line with March revised guidance (way down from January guidance): weak cell phone sales with special items leading to a loss.

Basic data:

Sales revenues were $9.4 billion, down 20% sequentially, and down 2% from year-earlier.

Net earnings loss was $181 million, compared to a gain of $686 million in Q1 2006.

GAAP net loss was $0.08 per share, but $0.09 from continuing operations.


Second quarter 2007 expected to be sequentially flat, with non-GAAP EPS from $0.02 to $0.03. $9.2 to 9.3 billion revenues. GAAP loss 7 to 9 cents per share.

Expects improved revenues and margins in second half of 2007.

Full year expectations are below prior guidance. But Network and Enterprise and Connected Home solutions segments will grow with good margins. Mobile Devices is the problem.

Conference Highlights:

"Performance in our Mobile Devices business in the first quarter is unacceptable." One step to recovery is products based on Linux/Java.

Shipped 45.4 million handsets. Mobile devices segment sales were $5.4 billion, down 15% from year-earlier. Market share estimated at 17.5%. Europe and emerging markets were particularly weak.

Net loss per share included acquisition related costs of $0.06; legal settlement of $0.03; and reoganization charges of $0.02.

Repurchased $3.1 billion of common stock.

Networks and Enterprise segment sales were $3.0 billion, up 20% from year-earlier. Symbol Technologies acquisition completed in quarter.

Connected Home solutions (set top boxes) segment sales were $1.0 billion, up 42% from year-earlier. Netopia and Tut Systems acquisitions were completed.

Pricing competition in emerging markets led to cutting back on sales.

Expects recovery in second half of the year and to be profitable for the year.

$3 billion increase in existing share repurchase program, for total of $7.5 billion. $2 billion will be accelerated purchases. Already spent $1.1 billion.

Hopes to reduce expenses by $400 million, partly with previously-announced job cuts.

Committed to growing Mobile market share, but it must be profitable market share. Aligning roadmaps with customers; multisourcing chips; using more Linux/Java. Exiting legacy platforms. Looking for better price points.

"We know we have work to do."


Pricing pressures on low end cell phones? Have good low-end products, but need profitability. That makes it mainly a cost-cutting proposition.

High end cell phone pricing? Strong brand in mid-range. 3G products moved in Europe, but we did not have enough high-end product. Working on new high-end product introduction.

GAAP charges were for acquisitions and restructuring.

Industry demand v. Motorola results? Both had impact. Lots of demand in Q4 in industry, put not profitable demand for Motorola. Very fast moving, very competitive market.

Multiple silicon suppliers? Have been using the division that spun off a couple of years ago. Needs to diversify. 3G market has lots of price points.

Manufacturing side? We did a phenomenal job on manufacturing side. Need high end products and low end production cost reductions.

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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2007 William P. Meyers