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iTunes phone in Motorola lineup

Motorola confirms plans to launch a new phone that will play digital music downloaded from Apple Computer's iTunes online music site.
/ Source: Financial Times

Motorola, the world's second-largest mobile phone maker, on Wednesday night confirmed plans to launch a new phone that will play digital music downloaded from Apple Computer's iTunes online music site.

Ed Zander, chief executive, said the iTunes product would be coming out in the next few months. He was speaking during a presentation of Motorola's first-quarter results after the markets closed on Wednesday.

There has been some speculation that Motorola might delay the launch of its music-playing mobile phone because of lack of enthusiasm among US network operators. Mr Zander sees innovative mobile phones, such as the sleek and successful Razr, as the key to competing with Nokia, the market leader.

Aside from the iTunes phone, Motorola also plans to introduce the Pebl, a curved flip phone, and the Slivr, a thin handset with a face that slides to a keypad a screen. He believes these "hot" and higher-priced handsets will help Motorola boost its market share and maintain or boost margins.

During the latest quarter Motorola announced 27 new handset models designed to capitalize on the success of Razr and shipped 28.7m mobile phones, a 13 per cent increase over the 2004 period, and lifted its market share to about 17.1 per cent, mostly at the expense of the number three manufacturer, Korea's Samsung.

While the growth in global mobile phone sales is expected to slow markedly this year from a heady 23 per cent last year, and Motorola faces price competition from Nokia, which slashed prices last year, Mr. Zander expressed confidence that the group could continue make gains.

Strong mobile phone sales coupled with cost cuts, helped drive Motorola's first-quarter net earnings increase to $692m, or 28 cents a share, from $609m, or 19 cents, a year earlier. The year-earlier results include the company's Freescale semiconductor business, which was spun off in December. Excluding Freescale, year-earlier earnings were $466m. On a comparable basis, sales rose to $8.16bn from $7.44bn a year earlier, with the mobile devices segment accounting for $4.4bn of the total.

For the current quarter, Motorola forecast earnings per share of 23 cents to 25 cents on revenue of $8.3bn to $8.5bn. Shares of Motorola rose 57 cents to $15.50 on Inet in after-hours trading. They had closed up 21 cents at $14.93 in New York.