Q1 2006 Motorola Inc. Earnings Conference Call Presentation

Motorola Q1 2006 Earnings
Release Conference Call

April 18, 2006

Slide - 1
Q1 2006 Earnings Release- April 18, 2006
MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
.

Ed Gams
Corporate Vice President
of Investor Relations

Slide - 2
.

Safe Harbor Statement
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 on pages 19 through 27 in item 1A
of Motorola’s 2005 Annual Report on Form 10-K and in Motorola’s other SEC
filings.

This presentation is being made on the afternoon of April 18, 2006. 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. 2006

Q1 2006 Earnings Release- April 18, 2006 Slide -- 3

Ed Zander
Chief Executive Officer

Slide - 4
.

David Devonshire
Chief Financial Officer

Slide - 6
.

Motorola Inc. Financial Results
Q1 2006 Q1 2005 Q1'06 vs. Q1'05

Sales $M $ 10,013 $ 8,161 Up 23%

Operating Margin 8.9% 10.6% Down 1.7 pts

Earnings Per Share $ 0.27 $ 0.28 Down 4%

Excluding Significant Items

Operating Margin 10.3% 10.6% Down 0.3 pts

Earnings Per Share $ 0.28 $ 0.22 Up 27%


Significant Items Discussed in the Earnings Press Release
Q1 2006 Reported EPS * $ 0.27
Includes:
Gain on Investments Net of Derivative Loss 0.03
Reorganization of Business Charges (0.02)
Stock Compensation Expense (0.02)

$ (0.01)

Q1 2005 Reported EPS * $ 0.28
Includes:
Gains on Sales of Investments and Businesses 0.06

* See appendix for reconciliation


Motorola Sales Trend
$ Billions
12
10.4 * Midpoint of Guidance 10.4
10.0
9.4
10
8.8 8.8
8.2
7.5 7.5
7.4
8

2004
6 2005
2006
4

2

0
Q1 Q2 Q3 Q4

Sales Increased ~23% Q1 2006 vs. 2005

Revenue Per Employee
$(000)’s
$600

$560
$550 $534
$513

$500 $486
$472

$450

$400

$350

$300
Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06

4 Quarter Rolling Average


Cash Flow and Debt
Cash Flow Cash & Debt
Q1 Year End
($ in Billions) Q1 2006 ($ in Billions) 2006 2005

Operating Cash Flow $ 0.7 Cash/Equiv/Mkt Sec $ 14.7 $ 14.8

Short Term/ Current Debt $ (0.5) $ (0.5)
Free Cash Flow $ 0.6
Long Term Debt $ (3.8) $ (3.8)

Total Debt $ (4.3) $ (4.3)

Net Cash/ (Net Debt) $ 10.4 $ 10.5

Debt to Total Capital Now At 20.4% vs. 20.3% at 12/31/05 *

* Debt to Total Capital = Debt/ Debt + Stockholders Equity


Stock Repurchase Update

• May 19, 2005 Authorized to Purchase $4B of
Stock over 3 Years

• In Q1: Purchased ~37M Shares, Average
Price of $21.99, Cash Used ~$815M

• Inception to Date: Purchased 78.7M Shares,
Cash Used ~ $1.7B


Q2 2006 Guidance
Sales $10.3B-$10.5B

Earnings Per Share $.30-.32
(excluding Stock Compensation Expense, any
Telsim recovery, impact of Auto business sale,
and any further reorganization expenses)

Tax Rate 36%

2.55 Billion
Shares Outstanding

Stock Compensation Expense $.02 Per Share


Comments on 2006
• Stock Compensation Expense Estimated
Annual Impact of $275M - $300M
• Estimated Tax Rate is 36%
• Additional Collection of ~$400M Related to
Telsim Expected in Q2
• Completion of Automotive Business Sale
Expected in Q2
• Further Reorganization Expenses Expected
Related to Global Supply Chain
Consolidation and Operating Expense
Reduction Initiatives

mobile devices business

earnings results

Q1 earnings release - highlights
a great start for 2006!
Mobile Devices Business Results

All-time Motorola record for units!
All-time record for Mobile Devices Q1 sales!
All-time record for Mobile Devices Q1 operating earnings!
6th consecutive quarter of Y/Y OE% improvement!*
6th consecutive quarter of Q/Q market-share growth!

… and we increased global market share to 21%
while sequentially expanding GM%!
* Excluding Reorganization Charges

Q1 earnings release - highlights
wickedly cool products
RAZR continues as world’s best-selling clamshell
… Motorola will sell 50 millionth RAZR in Q2!
Ultra-slim SLVR is redefining the “candy bar”
MOTOmusic is hot! … 6-million-unit milestone!
3G units are up nearly 400% vs. Q1 2005
iDEN is strong! … record Q1 units performance!
GSMA award is opening doors and driving sales
across price tiers in High-Growth Markets
… and new launches: 2 GSM, 3 CDMA and 1 iDEN

mobile devices – Q1
Q1 2006 Q1’06 vs. Q1’05
Sales $M $6,400 Up 45%
Operating Earnings $M $702 Up 60%

year over
Operating Margin 11.0% 1.0 ppt

Units Q1 46.1M Up 61%

year
Market Share Est. – Q1 21% Up ~5 ppts
Up ~2 ppts vs. Q4’05


north america – Q1

#1 at top 3 wireless operators
#1 in sell-through to consumers

Source: Motorola, Inc. Shares are calculated on Q1 06 Unit Shipments, includes iDEN.

latin america – Q1

#1 at top 2 wireless operators
#1 in sell-through to consumers


europe – Q1

strong #2 and growing
up 4 points vs. Q1 2005


north asia – Q1



high-growth markets – Q1



Q1: RAZR – the “gold standard”
Spectrum of Technologies:
GSM, GPRS, Edge,
CDMA 1X, EV-DO, UMTS, Dual-
Mode UMA

Array of Colors:
Silver, Black,
Pink, Hot Pink,
Lavendar Pink, Blue,
Gold, & Gun-Metal Grey

Cool Experiences:
Style, Imaging, Music


Q1: SLVR – redefining candy ba

SLVR L7 and L6
each outpaced
RAZR’s first 180
days in market!


Q1: PEBL – the precious stone

PEBL U6 units
more than
doubled vs. Q4!


Q1: MING – the smart phone

We are China’s smart-phone leader.
During Q1, MING joined the
Motorola A780 – China’s
best-selling smart phone.


Q1: Q – countdown to launch

Final software and hardware are
in pre-launch tests
with a leading customer.


Q1: RDIO – design for the mass
“connecting the unconnected”

FM-equipped style – a new
Motorola “must have”
for the masses.


our commitment
grow profitably with …
wickedly compelling products …
and rich experiences …
with quality and efficiency

Q2 outlook
market share – up vs. prior year & Q1
sales – up vs. prior year
operating profits – up vs. prior year
operating margin – up vs. prior year


Government & Enterprise Mobility Solutions – Q1
Sales $M $ 1,539 Up 2%

Operating Earnings $M $ 171 Up 2%

Operating Margin 11.1% Flat -

Excluding Reorganization Charge


Operating Margin 11.6% Up 0.5 pts


Motorola Announces Agreement to Sell
Automotive Electronics Business
Definitive Agreement with Continental AG
• Approximately $1 Billion in Cash
• Includes: Controls, Sensor, Interior Electronics,
Telematics
• Subject to Customary Closing and Regulatory
Conditions
• Great Fit for Customers, Employees
• Sharpens Motorola’s Strategic Focus on
Seamless Mobility


Q1 - Government Market Activity
United States
• New York City
• Pierce County, Washington
• King County, Washington
• San Diego
• State of New Hampshire

Latin America
• Military Police/State of Sao Paulo, Brazil

Europe
• O2 Airwave – London Underground

Asia
• Completed Command & Control
Communications System for Hong Kong Police


Q1 – Mesh and Enterprise Market Activity
MOTOMESH 4.9 GHz Solution
• Delaware County, PA
• Thomasville, GA
• Port Orange, FL
• Ohio (multi-agency project)

Q1: Enterprise Activity
• Wireless Valley Acquisition Gaining Traction
• Focus on Next-Generation Technologies
• Fixed Mobile Convergence
• Began Shipping Commercial-off-the-Shelf
Mobile Computing Device (HC700-L) and
Building out Mobile Computing Channel


Government & Enterprise Mobility Solutions
Q2 Outlook

Up Slightly vs. Prior Year
Sales
Operating Earnings
Operating Margin


Networks – Q1

Sales $M $ 1,431 Down 14%

Operating Earnings $M $ 132 Down 44%

Operating Margin 9.2% Down 4.9 pts





Q1 - Networks Market Activity
• Earthlink/Google to use Canopy for San Francisco Metro Wi Fi

• Canopy Network for the Indian State of Rajasthan

• IP Core Network Solution for Vistream for MVNOs in Germany

• Continued to Strengthen Leadership in the Push-to-Talk Over Cellular with
Recent Contracts:
-Vodafone (Spain)
-Public Telecommunications Corp (Yemen)
• 5-Year Access Network Deal with MTC Namibia Encompassing GSM, GPRS,
EDGE and Canopy


Networks – New Initiatives/ Future Revenue
• CDMA 1X EV-DO Rev A

• MOTOwi4 WiMAX Solutions

• Canopy

• Softswitch: Push to Everything

• FTTP

• M-Wallet

• Services: GAMA Architecture


Networks Q2 Outlook

Flat vs. Prior Year, Up vs. Q1
Sales
Down vs. Prior Year, Up vs. Q1
Operating Earnings
Down vs. Prior Year, Up vs. Q1
Operating Margin


Motorola Combines GEMS & Networks
Businesses Into One Segment
The Networks & Enterprise Segment
• Strengthen Our Position in End-to-End Network Infrastructure
Solutions to Private, Public and Enterprise Customers
• Leverage Key Current and Next-Generation
Technologies
• Improve Cost Structure
• Seamless Inside


Connected Home – Q1
Q1 2006 Q1'06 vs. Q1'05

Sales $M $ 710 Up 7%





Operating Margin 8.2% Up 5.3 pts


Connected Home – Q1 Highlights
▪ ShippedOver 2 Million Digital Entertainment Devices, 38% Increase over
Q105, Record for a Single Quarter

▪ Completed Acquisition of Kreatel Communications, Leading Developer of
IPTV Based Set-Tops

▪ Shipped Quarterly Record of ~ 630K Voice Modems; Total Modem
Shipments Were 2.6 Million

▪ Introduced a Residential Seamless Mobility Gateway Allowing Consumers
to Use the Same Mobile Device and Phone Number Inside and Outside of the
Home

▪ Starhub (Singapore) to Upgrade Hybrid Fiber Coaxial Cable Network to
DOCSIS® 3.0-Compatible Leveraging Motorola’s Channel Bonding
Technology


Connected Home – Q1 Highlights

The Connected Home Belongs to Motorola
Delivering Seamless Video and Voice Solutions Today!

Operators are Becoming Engaged

The Motorola Experience – MOTO ME


Connected Home – Q2 Outlook

Up vs. Prior Year
Sales
Up vs. Prior Year
Operating Earnings
Up vs. Prior Year
Operating Margin


Q1 2006 Summary
√
Market Share
√
Revenue
√
Profit
√
Cash Flow
√
Balance Sheet
√
Cost Structure
√
Innovation
√
Outlook

Motorola Q&A Participants

David Devonshire
Ed Zander
Chief Financial Officer
Chief Executive Officer

Greg Brown
Ron Garriques
President, Networks and Enterprise
President, Mobile Devices Business
Business

Dan Moloney Ed Gams
Vice President, Investor Relations
President, Connected Home
Business


Use of Non-GAAP Measurements
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 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 the these items and reconciliations of the non-GAAP measurements provided during this
call to GAAP measurements can be found: (i) in the Form 8-K filed by Motorola on April 18, 2006
(which is attached to this afternoon’s earnings press release), (ii) within the text of the slides that
accompany this webcast, or (iii) on the company’s website. Each of these items can be found on
Motorola’s website at www.motorola.com/investor.


Significant Items Discussed
Q1 2006

Q1 2006 PBT Q1 2006 Tax Q1 2006 PAT
(Inc)/Exp Inc/(Exp) (Inc)/Exp EPS impact

Gains on sales of investments, net of derivative loss (118) (45) (73) 0.03
Reorganization of business charges 71 15 56 (0.02)
Stock compensation expense 70 23 47 (0.02)
TOTAL IMPACT $ 23 $ (7) $ 30 (0.01)

Q1 2005

Q1 2005 PBT Q1 2005 Tax Q1 2005 PAT
(Inc)/Exp Inc/(Exp) (Inc)/Exp EPS impact

Gains on sales of investments (234) (89) (145) 0.06
TOTAL IMPACT $ (234) $ (89) $ (145) $ 0.06


OE Reconciliation of Significant Items
Q1 2006

Net Sales $ 10,013

Operating earnings $ 894
Operating earnings as a percentage of net sales 8.9%

Less: Significant items discussed 141
Operating earnings excluding significant items discussed $ 1,035

Q1 2005

Net Sales $ 8,161


Less: Significant items discussed 0
Operating earnings excluding significant items discussed $ 865


OE Reconciliation By Segment of Significant
Items From Continuing Operations
Q1 2006

TOTAL Mobile Devices GEMS Networks Conn.Home Other/Elims

Net Sales $ 10,013 $ 6,400 $ 1,539 $ 1,431 $ 710 $ (67)

Operating earnings 894 702 171 132 15 (126)
Operating earnings as a percentage of net sales 8.9% 11.0% 11.1% 9.2% 2.1% 188.1%

Operating earnings 894 702 171 132 15 (126)
Less: Significant items discussed 141 (1) 8 21 43 70
Operating earnings excluding significant items discussed $ 1,035 $ 701 $ 179 $ 153 $ 58 $ (56)
Operating earnings as a percentage of net sales 10.3% 11.0% 11.6% 10.7% 8.2% 83.6%

Q1 2005

TOTAL Mobile Devices GEMS Networks Conn.Home Other/Elims

Net Sales $ 8,161 $ 4,414 $ 1,503 $ 1,657 $ 662 $ (75)

Operating earnings 865 440 167 234 19 5
Operating earnings as a percentage of net sales 10.6% 10.0% 11.1% 14.1% 2.9% -6.7%

Operating earnings 865 440 167 234 19 5
Less: Significant items discussed 0 0 0 0 0 0
Operating earnings excluding significant items discussed $ 865 $ 440 $ 167 $ 234 $ 19 $ 5
Operating earnings as a percentage of net sales 10.6% 10.0% 11.1% 14.1% 2.9% -6.7%


Reconciliation of Revenue Per Headcount
2004 2005 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06
Headcount 67,641 68,971 67,952 68,568 68,777 68,971 69,142
Rolling 12 Months of Sales 31,323 36,843 32,043 33,326 35,252 36,843 38,698
*Revenue / HC (In 000's) 463 534 472 486 513 534 560

* Revenue Per Head = Rolling 12 Months of Sales / Qtr Ending Headcount


Safe Harbor Statement
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 on pages 19 through 27 in item 1A
of Motorola’s 2005 Annual Report on Form 10-K and in Motorola’s other SEC
filings.

This presentation is being made on the afternoon of April 18, 2006. 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. 2006


Q1 2006 Motorola Inc. Earnings Conference Call Presentation

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Q1 2006 Motorola Inc. Earnings Conference Call Presentation