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Q3 2007 Motorola, Inc. Earnings Conference Call Presentation
 

Q3 2007 Motorola, Inc. Earnings Conference Call Presentation

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    Q3 2007 Motorola, Inc. Earnings Conference Call Presentation Q3 2007 Motorola, Inc. Earnings Conference Call Presentation Presentation Transcript

    • Motorola Q3 2007 Earnings Conference Call October 25, 2007 Q3 2007 Earnings Release- October 25, 2007 Slide - 1 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
    • Dean Lindroth Investor Relations Officer Q3 2007 Earnings Release- October 25, 2007 Slide - 2 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
    • Safe Harbor A number of forward-looking statements will be made during this presentation. Forward- looking statements are any statements that are not historical facts. These forward- looking statements are based on the current expectations of Motorola and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, Motorola’s actual results could differ materially from these statements. Information about factors that could cause, and in some cases have caused, such differences can be found in this morning’s press release, on pages 16 through 24 in item 1A of Motorola’s 2006 Annual Report on Form 10-K and in Motorola’s other SEC filings. This presentation is being made on the 25th of October 2007. The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Motorola will not be reviewing or updating the material that is contained herein. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2007 Slide -- 3 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Ed Zander Chairman & Chief Executive Officer Q3 2007 Earnings Release- October 25, 2007 Slide - 4 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
    • Q3 2007 Earnings Call Q3 2007 Earnings Release- October 25, 2007 Slide - 5 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
    • Tom Meredith Chief Financial Officer Liquidity Profitability Growth Q3 2007 Earnings Release- October 25, 2007 Slide - 6 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
    • Q3 2007 Financial Results Q3 2007 Q2 2007 Q3 2006 ($ Millions) GAAP Sales $ 8,811 $ 8,732 $ 10,603 Operating Earnings (Loss) $ (10) $ (158) $ 968 Operating Margin -0.1% -1.8% 9.1% Earnings (Loss) from Continuing Operations $ 40 $ (38) $ 727 EPS from Continuing Operations $ 0.02 $ (0.02) $ 0.29 Excluding Highlighted Items Operating Earnings (Loss) $ 169 $ (32) $ 1,172 * Operating Margin 1.9% -0.4% 11.1% * Earnings (Loss) from Continuing Operations $ 147 $ 41 $ 792 * EPS from Continuing Operations $ 0.06 $ 0.02 $ 0.32 * * Excludes previously highlighted item for stock compensation expense of $62M from Q3 2006 Slide -- 7 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Cash Flow and Net Cash Q3 Q2 Q3 2007 ($ in Millions) 2007 2006 $ 40 Net Earnings (Loss) $ (38) $ 727 161 Depreciation, Amortization and Other, net 132 517 141 Change in Assets and Liabilities, net (129) 346 $ 342 Net Cash provided by (used for) Operating Activities $ (35) $ 1,590 ($ in Billions) $ 8.4 Cash* $ 8.7 $ 14.9 (1.5) Short-term & Current Debt** (1.8) (0.5) (2.7) Long-Term Debt (2.6) (3.8) (4.2) Total Debt (4.4) (4.3) $ 4.2 Net Cash $ 4.3 $ 10.6 *Cash and cash equivalents, Sigma funds, and Short-term investments **Notes payable and current portion of long-term debt Slide -- 8 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Cash Conversion Cycle 75 65 Cash Conversion Days 55 45 35 25 15 Qtr1 '06 Qtr2 '06 Qtr3 '06 Qtr4 '06 Qtr1 '07 Qtr2 '07 Qtr3 '07 Mobile Devices Home & Networks Mobility Enterprise Mobility Solutions Total Motorola Cash Conversion Cycle Qtr1 '06 Qtr2 '06 Qtr3 '06 Qtr4 '06 Qtr1 '07 Qtr2 '07 Qtr3 '07 Mobile Devices 18 26 21 26 48 49 37 Home & Networks Mobility 71 67 73 62 71 50 52 Enterprise Mobility Solutions 52 57 60 65 65 53 47 Total Motorola 31 36 35 38 56 50 43 Slide -- 9 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Return on Invested Capital 35% 31% 30% 30% 25% 21% 17% 20% 15% 13% 10% 5% 7% 5% 0% 2003 2004 2005 2006 Q1 '07 Q2 '07 Q3 '07 ROIC Return on Invested Capital (ROIC) = (12mth Rolling Operating Earnings excluding Highlighted Items and including Foreign Currency Gain/(Loss)) Tax Affected / 4 Quarter Average of (Shareholder’s Equity + Total Debt - Excess Cash**) *Tax rate used is the GAAP tax less taxes on highlighted items divided by the PBT excluding highlighted items for the rolling 12 month period. **Excess Cash = Rolling 4 Quarter Average of Total Cash & Short-term Investments – 5% of Rolling Net Sales Slide -- 10 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Greg Brown President & Chief Operating Officer Q3 2007 Earnings Release- October 25, 2007 Slide - 11 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
    • Mobile Devices Financials Q3 2007 Q2 2007 Q3 2006 ($ Millions) GAAP Sales $ 4,496 $ 4,273 $ 7,034 Operating Earnings (Loss) $ (248) $ (332) $ 843 Operating Margin -5.5% -7.8% 12.0% Excluding Highlighted Items Operating Earnings (Loss) $ (138) $ (264) $ 843 Operating Margin -3.1% -6.2% 12.0% Units (M) 37.2 35.5 53.7 Market Share (Estimate) 13.0% 13.5% 22.4% Slide -- 12 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Mobile Devices Highlights • Shipped 37.2M units • Improvements in channel inventory • Improvement in gross margin % • Reduction in operating expenses • Progress in software and silicon • Introduced WiMAX chipset optimized for size, cost, power and speed Slide -- 13 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Product Segmentation Q700 V8 iC602 A1200 Lux. Edition Lux. NEW W175 / W220 NEW W385 W180 NEW NEW Q9m NEW U9 W375 NEW V9m V9 Q9h Z6tv W377 Z8 NEW NEW NEW NEW W206 / NEW W213 NEW W156 / Q8 W160 Z6m V3 C115 K1m NEW NEW Z6 C139 Productivity Feature Multimedia Mass Market Slide -- 14 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Home and Networks Mobility Financials Q3 2007 Q2 2007 Q3 2006 ($ Millions) GAAP Sales $ 2,389 $ 2,564 $ 2,262 Operating Earnings $ 159 $ 191 $ 181 Operating Margin 6.7% 7.4% 8.0% Excluding Highlighted Items Operating Earnings $ 165 $ 207 $ 231 Operating Margin 6.9% 8.1% 10.2% Slide -- 15 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Home and Networks Mobility Highlights • Maintained market leadership in digital entertainment devices • Shipped two-millionth IP set top device • Introduced DSR-6000 product line • Conducted world’s first WiMAX 802.16e mobile handoff Slide -- 16 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Enterprise Mobility Solutions Financials Q3 2007 Q2 2007 Q3 2006 ($ Millions) GAAP Sales $ 1,954 $ 1,920 $ 1,329 Operating Earnings $ 328 $ 303 $ 254 Operating Margin 16.8% 15.8% 19.1% Excluding Highlighted Items Operating Earnings $ 336 $ 302 $ 280 Operating Margin 17.2% 15.7% 21.1% Slide -- 17 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Enterprise Mobility Solutions Highlights • Strong performance in Government & Public Safety and Enterprise markets • TETRA and MOTOTRBO two-way radio successes • Shipped one-millionth MC9000, rugged mobile computer • Shipping the new MC17 mobile computer • Good software integrated on new enterprise devices Slide -- 18 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Q&A Participants Ed Zander Tom Meredith Chairman and Chief Chief Financial Officer Executive Officer Greg Brown Dean Lindroth President and Chief Investor Relations Officer Operating Officer Slide -- 19 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Safe Harbor A number of forward-looking statements will be made during this presentation. Forward- looking statements are any statements that are not historical facts. These forward- looking statements are based on the current expectations of Motorola and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, Motorola’s actual results could differ materially from these statements. Information about factors that could cause, and in some cases have caused, such differences can be found in this morning’s press release, on pages 16 through 24 in item 1A of Motorola’s 2006 Annual Report on Form 10-K and in Motorola’s other SEC filings. This presentation is being made on the 25th of October 2007. The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Motorola will not be reviewing or updating the material that is contained herein. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2007 Slide -- 20 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
    • Use of Non-GAAP Measures In addition to the GAAP results provided during this conference call, Motorola has presented certain non- GAAP measurements. Motorola has provided these non-GAAP measurements as a measure to help investors better understand its core operating performance, enhance comparisons of Motorola’s core operating performance from period to period and to allow better comparisons of Motorola’s operating performance to that of its competitors. Among other things, the Company’s management uses these operating results, excluding the identified items, to evaluate the performance of its businesses and to evaluate results relative to incentive compensation targets. Management uses operating results excluding these items because they believe this measure enables them to make better period-to-period evaluations of the financial performance of its core business operations. There are inherent limitations in the use of operating results excluding these items because the company’s GAAP results do not include the impact of these items. The non-GAAP measures are intended only as a supplement to the comparable GAAP measures and the company compensates for the limitations inherent in the use of non-GAAP measures by using GAAP measures in conjunction with the non-GAAP measures. As a result, investors should consider these non-GAAP measures in addition to, and not in substitution for, or as superior to, measures of financial performance prepared in accordance with GAAP. Details of these items and reconciliations of the non-GAAP measurements provided during this call to GAAP measurements can be found on Motorola’s website at www.motorola.com/investor. Slide -- 21 Q3 2007 Earnings Release- October 25, 2007 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.