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Friday, October 18, 2013

11:50 PM 0

The Moto X smartphone; image via Motorola

Moto X, the first flagship released by Motorola since Google swallowed it last year for $12 billion, still has a ways to go to prove its financial worth to the company.

Sales were up by a third at Google’s smartphone division to $1.18 billion, but it still posted an operating loss of $248 million in the third quarter. That’s wider than the $192 million deficit it posted this time last year, but better than its $342 million loss in the second quarter.

That made it easier for Google Chief Executive Larry Page to ask investors for patience on Motorola, where it was “still early days.” He added on Google’s third-quarter earnings call that management were “working to build out marketing and distribution.”Fortunately parent company Google can afford to give Motorola and the Moto X some time to eke out some market share. Google’s overall profits jumped by 36% to $2.97 billion and the company’s shares soared to surpass a record $1,000 on Friday — they were up almost 13% to $1,003 in early afternoon trading in New York.

At its launch, Motorola’s CEO Dennis Woodsidetold Forbes that the Moto X was bringing Motorola back to its “roots in innovation.” The device boasts a Motomaker website which lets people customize colors and materials (wood is coming later this year) for the phone’s casing, as well as an always-on microphone that allows users to wake the phone up without touching it, utilizing the digital personal assistant Google Now.

Researchers at ABI went as far as saying recently that thanks to an efficient use of power and the use of two separate processors, its curved form factor and impressive screen resolution, the Moto X was more innovative than Apple's AAPL +0.87% latest iPhone.

Yet Apple still managed to overshadow the Moto X when it was released across five major U.S. carriers on Sept. 10, announcing its iPhone 5S and 5C on the same day.

There have favorable reviews, but mixed signals about demand for the Moto X ever since. Chief Executive Woodside told Reuters last month that Motorola was shipping 100,000 of the devices, weekly, from its manufacturing plant near Dallas, Texas.

That’s a relatively modest number, but Woodside said the phones were also being sold at a profit. Motorola is basing all manufacturing of the Moto X in the United States, even though the cost of labor of doing so is estimated to bethree times higher than in China.