Motorola Mobility Holdings, Inc. (NYSE: MMI) on Thursday reported net revenues of $3.3 billion in the second quarter of 2011, up 28 percent from the second quarter of 2010.

On a non-GAAP basis, the net earnings in the second quarter of 2011 were $26 million, or $0.09 per share, compared to a loss of $87 million, or $0.30 per share, in the second quarter of 2010.

Motorola Mobility beat analysts' estimates for the second quarter. Analysts had an average estimate of 5 cents, according to a Bloomberg survey. Analysts estimated an average of $3.11 billion in sales.

"In the second quarter, Mobile Devices launched several new smartphones in the U.S. and markets around the world. Revenues grew over 40 percent driven largely by Latin America and China where sales more than doubled year over year." said Sanjay Jha, chairman and chief executive officer, Motorola Mobility. "With a focus on profitable growth and delivering differentiated LTE smartphones and tablets, we expect to achieve profitability in Mobile Devices in the fourth quarter and for the full year 2011."

The Company's outlook is third-quarter net earnings per share of $0.00 to $0.10 and 2011 net earnings per share of $0.48 to $0.60.The forecasts for the third quarter and full year that trailed estimates by analysts surveyed by Bloomberg.

New devices have helped Motorola to revive smartphone sales this year. However, quarterly sales are still less than a third of the company's phone sales in 2007, Bloomberg News points out.

In addition, Motorola is not even among the top five smartphone vendors. In the first quarter, the top five vendors based on units sold were Nokia, Apple, Research in Motion, Samsung and HTC, taking a combined 77.4% of the market.

So what is Motorola's diamond in the rough?

New smartphones, tablets

Motorola said net revenues from mobile devices (smartphones and tablets) in the second quarter were $2.4 billion, up 41 percent compared with the year-ago quarter. The Company shipped a total of 11.0 million mobile devices, including 4.4 million smartphones and 440,000 Motorola XOOM tablets. In the second quarter of 2010, the company shipped 8.3 million mobile devices, including 2.7 million smartphones.

This year, Motorola:
* Expanded Motorola DROID family at Verizon Wireless with the introduction of DROID X2 and DROID 3 by Motorola both featuring a dual-core 1GHz processor, providing better gaming experiences, web browsing, multi-tasking, and Adobe® Flash® video performance

* Launched 4 new smartphones in China, including the Motorola XT883 with China Telecom, the newest and most advanced member of the powerful Milestone product family, and the XT316, Motorola's first value priced smartphone for emerging market consumers

* Expanded distribution of the ATRIX 4G smartphone and Motorola XOOM tablets into Latin America, China, Korea, and Europe

* Named exclusive U.S. launch marketing partner for mobile devices and tablets by Spotify. Spotify is an award-winning digital music service that gives users on-demand access to one of the world's largest music libraries

In the past years, Motorola has opted to use Google's Android operating system for its smartphone instead of its own proprietary platform. The move to Android appears to be a smart on its face as the Android is already the top platform for mobile phones this year, taking 39 percent of the market. Research firm IDC expects that by 2015, Android will continue to be number 1, hiking its market share to 43.8 percent.

Motorola is also able to take advantage of the ecosystem of apps in the Android marketplace, which matches that apps available for Apple devices in the Apple App Store. However, the Android is not exclusive to Motorola -- it is also used by Sony, HTC, and LG, among others, for their smartphones, and Lenovo, Amazon, and others for their tablets. This makes difficult for Motorola to outclass rivals with better performance and interface as they are using the same platform. Apple, which uses its own iOS platform for its iPhone and iPad, has dominated sales and has pushed the iOS as the number 2 platform all by itself.

Motorola though is up for something big. Its Droid product line, which was launched in 2009, was well received by consumers, though Motorola was unable to build its momentum.

This year, Motorola is launching 10 devices (with Sprint in the U.S.), including Motorola Photon 4G, the ready-for business Motorola XPRT smartphone, the Motorola TITANIUM smartphone featuring iDEN technology, and Motorola TRIUMPH. One of these devices could be the next RAZR.

Was king of the world

In the mid-1990, Motorola dominated the analog cellphone market, with its StarTAC flip phone. However, it lost the crown to Nokia when phones became digital.

In 2004, Motorola recovered its status as the king of the smartphone market after releasing one of the all time bestsellers, the RAZR V3 product line. Motorola was sent away from the limelight after Apple released its iPhone touch-screen, no-keypad phones.

At the present time, although its Droid product line has been highly touted, Motorola trails Samsung even in the sale of Android phones.

But Motorola was twice the king of smartphones, hence, it would not be impossible for Motorola to take the crown for the third time.

Smartphone Technology

According to regulatory filings, Carl Icahn and his Icahn Capital LP, shareholders of Motorola Mobility, on July 20 and 21 discussed with the Motorola their view that Motorola should explore alternatives regarding its patent portfolio to enhance shareholder value. Icahn believes that Motorola's patent portfolio, which is substantially larger than Nortel Networks' and includes numerous patents concerning 4G technologies, has significant value. In addition, there may be multiple ways to realize such value given the current heightened market demand for intellectual property in the mobile telecommunications industry.

In response to Icahn's suggestions, Motorola Mobility said that its Board of Directors and management team are continuously reviewing the Company's strategic direction and opportunities. "Since Motorola Mobility became a new, independent public company in the first quarter of 2011, it has delivered innovative products and solid growth, including 22% revenue growth during its first quarter. Motorola Mobility has achieved these results, in part due to the fact that it has one of the strongest and most respected patent portfolios in the industry with over 17,000 patents and 7,500 pending," Motorola said.

At an auction a consortium of comprised of Apple Inc., Microsoft, Research In Motion Ltd., Sony Corp., Ericsson AB and EMC Corp., won an auction for the 6,000 patents of defunct Nortel Networks with the group's $4.5 billion cash offer. The 4-day auction raised the price five times Google Inc.'s $900 million opening bid. RIM's Blackberry and Apple's iPhone do not use the Android OS and Microsoft is providing its own OS for future Nokia phones.

Google and smartphone makers are scrambling to buy patents for defense against lawsuits targeting their operating systems or smartphones.

Nokia has already won a settlement against Apple said to be worth millions (or billions). Nokia, has been in the handheld business earlier than Nokia, had claimed that Apple's iPhone smartphone and iPad tablet infringed on its patents. As licensee, Apple will be making royalty payments to Nokia for mobile devices Apple sells.

Apple itself has accused its rivals of widespread imitation. It has been pursuing complaints against Samsung and HTC, manufacturers of phones based on the open source Android OS.

Motorola, as it has blazed the trail in smartphones and cellphones, could have its valuable share in the IP wars.

RELATED STORIES