Q4 2006 Motorola Inc. Earnings Conference Call Presentation

Q4 2006 Earnings Release- January 19, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. . Slide - 1

Motorola Q4 2006 Earnings Release Conference Call

January 19, 2007


Ed Gams

Corporate Vice Presidentof Investor Relations

Q4 2006 Earnings Release- January 19, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.

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Safe Harbor StatementA 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 morning of January 19, 2007. 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. 2007


Ed Zander

Chief Executive Officer


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David Devonshire

Chief Financial Officer


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Motorola Inc. Financial ResultsAnnual

Q4 2006 2006GAAPSales ($M) 11,792$ 42,879$

Operating Earnings ($M) 753$ 4,092$

Operating Margin 6.4% 9.5%

EPS- Continuing Operations 0.21$ 1.30$

Excluding Highlighted ItemsOperating Earnings ($M) 885$ 4,318$



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Items Highlighted in Earnings Press Releases Q4

Highlighted Item EPS impact

Investment-related losses (0.04)$ Stock compensation expense (0.02)$ Legal reserve (0.01)$ Reorganization of business charges (0.01)$ Tax benefits, net of tax expenses 0.03 Total Continuing Operations Impact (0.05)$

Highlighted Item EPS impact

Collection related to Telsim 0.13$ Loss on sale of investment (0.02) Charge for past use of Kodak IP (0.01) Tax adjustments 0.02 Total Continuing Operations Impact 0.12$

Q4 2006

Q4 2005


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Cash Flow and Debt

Debt to Total Capital of 20.4% vs. 20.3% at 12/31/05

Annual Q4 Year End ($ in Billions) Q4 2006 2006 ($ in Billions) 2006 2005

Operating Cash Flow 0.7$ 3.5$ Cash/Equiv/Mkt Sec 15.6$ 14.8$

CapEx (0.3)$ (0.7)$ Short Term/ Current Debt (1.7)$ (0.5)$

Free Cash Flow 0.4$ 2.8$ Long Term Debt (2.7)$ (3.8)$

Total Debt (4.4)$ (4.3)$

Net Cash/ (Net Debt) 11.2$ 10.5$

Cash Flow Cash & Debt


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Stock Repurchase Update

• In Q4: Purchased ~32 M Shares, Average Price of $21.83, Cash Used ~$700M

• Q2 2005 through Q4 2006: Purchased 213.4 M Shares, Cash Used $4.7B

• $3.8B Remains Authorized for Repurchase Through June 2009


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Sales $10.4-10.6B

Q1 2007 Motorola Guidance


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Mobile Devices BusinessMobile Devices Business

Results


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All-time record for units.All-time record for sales.9th consecutive quarter

of Q/Q market-share growth.Global market share increased to 23.3%

with growth in North America, Asia and Europe

… and exceeded 20% global share on an annualized basis for first time since 1997.

However …

Q4 ResultsQ4 Results


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- Overall pricing, mix and volume forecast proved to be incorrect for our GSM business.

- Did not capitalize on strength of UMTS market.

- Challenges with iDEN business in U.S.

Q4 ResultsQ4 ResultsMissed Q4 profit target:


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Mobile Devices FinancialsAnnual

Q4 2006 2006GAAPSales ($M) 7,806$ 28,383$





Units (M) 65.7 217.4 Market Share (Estimate) 23.3% 22.2%

* *

* The company now reflects costs associated with the amortization of intangible assets and in-process research and development at the corporate level rather than at the business segment level.


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Sold more MOTORAZR family devices than in any quarter

Launched MOTORAZR xx in Japan and MOTOKRZR in Korea. Both are hits with consumers

Drove growth in mobile music with MOTOROKR E2 & E6

Continued to launch MOTOMING into new marketsConverted more smart-phone enthusiasts to MOTO-Q

Expanded our leadership in Bluetooth accessoriesAnd, met our product-launch commitments …

Q4 ResultsQ4 ResultsDemand is strong:


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Q4: All new products launched.Q4: All new products launched.

December October September September


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Q4: All new products launched.Q4: All new products launched.

November Late NovemberLate November October


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Q1: And, at CES they won Q1: And, at CES they won ……Innovation and Design Leadership Awards


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Grow profitably with …wickedly compelling products …

Mobile Devices:Our Strategy

with quality and efficiency.and rich experiences …


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Networks & Enterprise Highlights

Successfully Completed Symbol Acquisition

Continued Public Safety Leadership With New Wins Globally

Increased Next Gen Networks/ WiMAX Momentum

Won Eight-Year GSM Contract With Vodafone


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Networks & Enterprise FinancialsAnnual

Q4 2006 2006GAAPSales ($M) 3,043$ 11,245$





* *



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Enterprise Mobility


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Clearwire WiMAX trial underway

Sprint - Motorola awarded Chicago market

WiMAX leads the way - next generation networks

Now more than 20 trials worldwide

leads the way on

WiMAXQ4


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Vodafone Turkey – Eight-year contract to upgrade, extend and manage network

Emerging Markets – New & expansion contracts: fast-growing networks in Lebanon, Nigeria, Pakistan, Russia and Yemen

Huawei Collaboration Gaining Traction – MTC (Kuwait), MTNL (India), and VIBO Telecom (Taiwan)

Carrier Networks


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Leader in Public Safety Globally

Strong U.S. performance, including State of Mississippi

Significant wins in all regions

TETRA awards for Norway & Iceland


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Next Generation Networks Growth

Networks & Enterprise:Our Strategy

Category Leadership In Enterprise MobilityExpand Public Safety


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Digital Entertainment Devices – 3.2M

Data and Voice Modems – 3.2M

Record Revenue in IP Infrastructure/Increased Market Share

Connected Home Solutions


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Q4 Highlights Strengthening our Position in Cable

(Mexico)


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Q4 Highlights Growth in New Customer Segments

http://www.sentivision.com/index.php


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Q4 Highlights Strengthening End-to-End Portfolio

While Adding Value to Customers!


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Connected Home Solutions FinancialsAnnual

Q4 2006 2006GAAPSales ($M) 980$ 3,327$

Operating Earnings ($M) 118$ 224$


Excluding Highlighted ItemsOperating Earnings ($M) 117$ 299$


* *



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Continue to Drive Market Leadership

Deliver Triple Play Globally

Expand Seamless Mobility Experiences

Continue to Drive Operational Performance

Connected Home:Our Strategy


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Chief Executive OfficerEd ZanderEd Zander

Motorola Q&A Participants

David DevonshireDavid Devonshire

Dan MoloneyDan Moloney

Chief Financial Officer

President, Connected Home Business

Ron GarriquesRon GarriquesPresident, Mobile Devices Business

Greg BrownGreg BrownPresident, Networks and Enterprise

Business

Ed GamsEd GamsVice President, Investor Relations


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Use of Non-GAAP MeasurementsIn 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 January 19, 2006 (which had this morning’s earnings press release attached), (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.


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OE Reconciliation By Segment of Highlighted Items

TOTAL Mobile Devices N&E Conn.Home Other/Elims

Net Sales 11,792$ 7,806$ 3,043$ 980$ (37)$

Operating earnings 753 341 428 118 (134) Operating earnings as a percentage of net sales 6.4% 4.4% 14.1% 12.0% 362.2%

Operating earnings 753 341 428 118 (134)

Less: Highlighted items discussed 132 0 73 (1) 60

Operating earnings excluding highlighted items discussed 885$ 341$ 501$ 117$ (74)$ Operating earnings as a percentage of net sales 7.5% 4.4% 16.5% 11.9% 200.0%


Net Sales 42,879$ 28,383$ 11,245$ 3,327$ (76)$

Operating earnings 4,092 2,690 1,521 224 (343) Operating earnings as a percentage of net sales 9.5% 9.5% 13.5% 6.7% 451.3%

Operating earnings 4,092 2,690 1,521 224 (343)

Less: Highlighted items discussed 226 (1) 182 75 (30)

Operating earnings excluding highlighted items discussed 4,318$ 2,689$ 1,703$ 299$ (373)$ Operating earnings as a percentage of net sales 10.1% 9.5% 15.1% 9.0% 490.8%

2006

Q4 2006

* The company now reflects costs associated with the amortization of intangible assets and in-process research and development at the corporate level rather than at the business segment level. Full year reconciliation is available on our Investor Relations website.


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OE Reconciliation By Segment of Highlighted Items


Net Sales 10,039$ 6,538$ 2,874$ 703$ (76)$

Operating earnings 1,711 663 542 52 454 Operating earnings as a percentage of net sales 17.0% 10.1% 18.9% 7.4% -597.4%

Operating earnings 1,711 663 542 52 454

Less: Highlighted items discussed (447) 57 0 0 (504)

Operating earnings excluding highlighted items discussed 1,264$ 720$ 542$ 52$ (50)$ Operating earnings as a percentage of net sales 12.6% 11.0% 18.9% 7.4% 65.8%


Net Sales 35,262$ 21,459$ 11,202$ 2,871$ (270)$

Operating earnings 4,605 2,192 1,939 153 321 Operating earnings as a percentage of net sales 13.1% 10.2% 17.3% 5.3% -118.9%

Operating earnings 4,605 2,192 1,939 153 321

Less: Highlighted items discussed (347) 88 54 4 (493)

Operating earnings excluding highlighted items discussed 4,258$ 2,280$ 1,993$ 157$ (172)$ Operating earnings as a percentage of net sales 12.1% 10.6% 17.8% 5.5% 63.7%

2005

Q4 2005

* The company now reflects costs associated with the amortization of intangible assets and in-process research and development at the corporate level rather than at the business segment level. Full year reconciliation is available on our Investor Relations website.


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Highlighted Items Discussed

Highlighted Item Statement LineQ4 2006 PBT

(Inc)/ExpQ4 2006 Tax

Inc/(Exp)Q4 2006 PAT

(Inc)/Exp EPS impact

Investment-related losses Other income (expense) - Other and Gains on sales of investments and businesses 192$ 73$ 119$ (0.04)$

Stock compensation expense Cost of sales, R&D and SG&A 60$ 20$ 40$ (0.02)$ Legal reserve Other charges (income) 25$ 9$ 16$ (0.01)$ Reorganization of business charges Cost of sales and Other charges (income) 47$ 18$ 29$ (0.01)$ Tax benefits, net of tax expenses Income tax expense - 79 (79) 0.03 Total Continuing Operations Impact 324$ 199$ 125$ (0.05)$

Highlighted Item Statement LineQ4 2005 PBT

(Inc)/ExpQ4 2005 Tax

Inc/(Exp)Q4 2005 PAT

(Inc)/Exp EPS impact

Collection related to Telsim Other charges (income) (504)$ (181)$ (323)$ 0.13$ Loss on sale of investment Loss on sales of investments and businesses 77 29 48 (0.02) Charge for past use of Kodak IP Cost of sales 57 22 35 (0.01) Tax adjustments Income tax expense 68 (68) 0.02 Total Continuing Operations Impact (370)$ (62)$ (308)$ 0.12$

Q4 2006

Q4 2005


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Quarterly Financials Reflecting Reclassification

. Certain costs associated with amortization of intangible assets, information technology development and new product introduction (NPI) costs have been reclassified between statement lines in the Consolidated Statements of Operations in the prior period financial statements to conform to the current period presentation

TOTAL Q1 Q2 Q3 Q4

Net Sales 42,879$ 9,608$ 10,876$ 10,603$ 11,792$ Costs of Sales 30,152 6,677 7,519 7,233 8,723 Gross Margin 12,727 2,931 3,357 3,370 3,069

Selling, general and administrative expenses 4,504 1,069 1,154 1,123 1,158 Research and development expenditures 4,106 964 1,035 1,046 1,061 Other charges (income) (108) 29 (374) 172 65 Intangibles Amortization & IPR&D 133 20 20 61 32 Operating earnings 4,092$ 849$ 1,522$ 968$ 753$

TOTAL Q1 Q2 Q3 Q4

Net Sales 35,262$ 7,767$ 8,408$ 9,048$ 10,039$ Costs of Sales 23,833 5,191 5,654 6,122 6,866 Gross Margin 11,429 2,576 2,754 2,926 3,173

Selling, general and administrative expenses 3,628 886 877 881 984 Research and development expenditures 3,600 823 897 901 979 Other charges (income) (473) (7) 6 48 (520) Intangibles Amortization & IPR&D 69 18 16 16 19 Operating earnings 4,605$ 856$ 958$ 1,080$ 1,711$

2006

2005


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Safe Harbor StatementA 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 morning of January 19, 2007. 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. 2007

Economy & Finance

Q4 2006 Motorola Inc. Earnings Conference Call Presentation