Motorola looks to turnaround in 2010

Business is starting to pick up for beleaguered handset-maker Motorola (NYSE:MOT) and next year should bring improved financial performance, co-CEO and CEO of mobile devices Sanjay Jha told investors on a conference call today. Jha is anticipating a sequential increase in four-quarter sales, driven by the announced launch of its first two Google (NASDAQ:GOOG) Android-based smartphones, the Cliq on T-Mobile (NYSE:DT) and the Droid on Verizon Wireless (NYSE:VZ, NYSE:VOD).

Moto posted a small profit in Q3, and Jha said he expects mobile devices to break even in at least one quarter next year, thanks to its focus on Android and smartphones. The Droid, especially, has received a lot of praise and hype, and Moto has promised at least 20 more smartphone devices in 2010. “We are not expecting a dramatic increase in our market share to be able to get a rational break-even point,” Jha said on today’s call.

While smartphones are clearly Motorola’s focal point, Jha said he wouldn’t entirely abandon the feature-phone market. Motorola will continue to have a portfolio of lower-end handsets and an ODM strategy to address feature phones in U.S., Latin America and Asia, but Jha said there won’t be a lot of investment in that tier going forward. Most upcoming devices — including the Cliq, but not the Droid — will feature its own MotoBlur user interface, designed around social networking.

“Some would say that over 50% of shipments in the U.S. will be smartphones,” Jha said, adding that growth in smartphones is faster than most people realize. “That represents potentially as large as 70% of the profit pool in the U.S.” Jha said Motorola will also work to bring down the price of Android devices and drive them into the lower-tier feature-phone market.

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