Q3 2007 Motorola, Inc. Earnings Conference Call Presentation
1. 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.
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2. 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.
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4. 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.
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5. 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.
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6. 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.
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7. 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 $62M from Q3 2006
Slide -- 7
Q3 2007 Earnings Release- October 25, 2007
MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
8. Cash Flow and Net Cash
Q3 Q2 Q3
2007
($ 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.
9. 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.
10. 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.
11. 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.
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12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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.
21. 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.