By AP Business Writer
updated 1/20/2006 9:12:49 AM ET 2006-01-20T14:12:49

Motorola Inc. has a simple formula for how to duplicate the runaway success of its ultra-slim Razr phone last year: Make new Razrs.

The company rode strong sales of the original Razr and 26 new cell phones, including some Razr variations, to an 86 percent jump in fourth-quarter income and said more are on the way as rivals try to copy the trendy handsets.

“I think the year of 2005 was the Razr and the year of 2006 is more Razrs,” CEO Ed Zander told analysts Thursday when asked how Motorola can maintain its momentum.

No matter what the Schaumburg, Ill.-based company does, it may be tough to keep investors happy. Clear evidence came when Motorola’s earnings topped estimates but revenue and handset shipment totals came in just shy of expectations, sending shares tumbling in after-hours activity after a 3 percent jump during the regular trading session.

Morningstar Inc. analyst John Slack said Wall Street might have gotten “a little greedy” by expecting a blowout quarter to cap Motorola’s stellar year.

“These are great numbers,” he said. But compared with lofty expectations, “they delivered but they didn’t exceed.”

Net earnings for the October-through-December quarter were $1.2 billion, or 47 cents per share, up from $647 million, or 28 cents per share, a year earlier.

Excluding certain items, including a gain from a legal settlement with Turkish network operator Telsim and tax adjustments, earnings were 35 cents per share. That was a penny more than the mean estimate of analysts surveyed by Thomson Financial.

Revenue was $10.43 billion, up 18 percent from $8.84 billion although slightly below analysts’ estimates of $10.51 billion.

Motorola said it shipped 44.7 million handsets during the quarter, an increase of 40 percent compared with a year earlier and about 1 percent below analysts’ estimate. It pegged its world market share at 19 percent, up 3 percent in a year and 0.5 percent from the third quarter, which would strengthen its second-place position but still leave it far behind Finland’s Nokia.

It launched 26 new handsets in the quarter, several of them variations on the Razr that has reinvigorated the once-slumping company since 2004.

“It’s not like we’ve been selling (just) black Razrs here for the last year,” Zander said on a conference call concerning competitors’ similar new models. “We’ve got 26 new products and I think you’re going to see more this year.”

Results among Motorola’s smaller units were mixed. Its government unit saw operating earnings rise 41 percent on an 8 percent increase in sales to $1.8 billion, the networks segment had an 18 percent drop in earnings on a 4 percent drop in sales to $1.5 billion, and its connected home division had $60 million in earnings on a 1 percent rise in sales.

The company said it expects first-quarter sales of between $9.3 billion and $9.5 billion and earnings of 27 cents to 29 cents, excluding stock-option expenses of about 2 cents per share. Both those forecasts are within the range expected by analysts, who had estimated sales of $9.35 billion and per-share earnings of 28 cents.

The industry is watching closely to see if Motorola can keep the momentum going with new Razr-related products such as the Slvr and the Pebl.

“Despite not being a blockbuster quarter, they have the hottest product portfolio in the market right now as far as handsets,” Slack said.

For the full year, Motorola tripled its net earnings to $4.58 billion, or $1.81 a share, up from $1.53 billion, or 64 cents a share, in 2004. Revenue was $36.8 billion, up 18 percent from $31.3 billion.

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