Motorola Introduces Second Android-Powered Phone

By Hugo Miller

Oct. 28 (Bloomberg) -- Motorola Inc. introduced its second phone based on Google Inc.’s Android software, fighting for a bigger share of the growing market for Web-equipped phones to reverse more than a year of sales declines.

The phone, called the Droid, features a larger screen than Apple Inc.’s top-selling iPhone and has higher resolution, said co-Chief Executive Officer Sanjay Jha. It will be available Nov. 6 on the Verizon Wireless Web site and in retail stores, Motorola said. The price will be $199.99 with a two-year agreement after a $100 mail-in rebate.

Motorola is rebuilding its mobile-phone division around the Android operating system to entice consumers who abandoned its handsets in favor of the iPhone and Research In Motion Ltd.’s BlackBerry. Motorola’s share of the phone market dropped by almost half in the second quarter from 10 percent a year earlier, according to Gartner Inc.

“We’ve been missing from the market,” Jha, 46, said in an interview. The Droid “absolutely does” get Motorola back into the game with a better operating system and a faster Internet browser, he said.

Based on Android 2.0, a newer version of the Google operating system, the device allows users to run multiple applications at once, features voice-driven Web searches, and has one of the “fastest Web browsers available today,” Jha said.

‘Favorable Reviews’

T-Mobile USA Inc. will begin selling the Schaumburg, Illinois-based company’s first Android phone, the Cliq, on Nov. 2 for $199.99 with a two-year contract.

“Droid boasts impressive specs and reviews from the blog community have been very favorable thus far,” said Matt Thornton, an analyst with Avian Securities LLC in Boston. “This should give some indication as to how the device will be received by the consumer, the press and the investor community.”

Thornton has a “positive” rating on the stock.

Motorola plans more Android devices. At least one of those will be sold through a third carrier, Jha said. The Droid will be available through multiple carriers outside the U.S. later this year, he said.

Jha declined to comment on how Android phones will affect earnings. The company will report third-quarter results tomorrow. Analysts predict profit of less than 1 cent a share, excluding some items, the average of estimates in a Bloomberg survey.

Motorola is trying to stop losses of more than $4 billion since 2007 and recapture the success it had with the Razr phone five years ago. Revenue at the mobile-phone business, run by Jha, dropped 45 percent to $1.83 billion in the second quarter. The rest of the company is run by co-CEO Greg Brown.

Motorola rose 6 cents to $7.96 at 4 p.m. in New York Stock Exchange composite trading. The shares have climbed 80 percent this year.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net