Motorola posts a loss, larger than expected

Depressed economy, competition blamed for gloomy results

April 11, 2001|By BLOOMBERG NEWS

SCHAUMBURG, Ill. - Motorola Inc., the No. 2 maker of cellular phones, said yesterday that it had a first-quarter loss from operations, its first in about 15 years, because slowing economic growth is crimping sales of handsets and semiconductors.

Excluding charges and gains, the loss was $206 million, or 9 cents a share, compared with profit from continuing operations of $481 million, or a split-adjusted 21 cents, a year earlier, Motorola said in a statement. Sales fell 11 percent from $8.75 billion to $7.75 billion.

Motorola twice reduced its forecasts for the quarter as a slowing U.S. economy and steep competition from Finland's Nokia Oyj, the No. 1 cell-phone maker, stymied sales of mobile phones and semiconductors, Motorola's two largest businesses. To cut costs, the company has said it will eliminate 22,000 jobs worldwide, or 15 percent of its work force, as it closes and sells factories.

"Their guidance has been exceptionally low, and expectations are exceptionally low," David Katz, chief investment officer for Matrix Asset Advisors Inc., said before the release of earnings. Matrix owns more than 400,000 Motorola shares.

The shares of the company, which is based in Schaumburg, fell as low as $12 after the release of earnings. They had risen $1.50 to $13 on the New York Stock Exchange before the report. The stock has declined 78 percent from a record close of $60.21 on March 6, 2000.

The company had been expected to report a loss of 7 cents a share (excluding gains and charges), the average analyst estimate from First Call/Thomson Financial.

Including charges for cost-reduction activities and unspecified gains from the sale of investments, the company had a final loss of $533 million, or 24 cents a share, in the recent period.

Including charges and gains in the year-earlier quarter, the company had net income of $448 million, or 20 cents.

Earlier yesterday, British Prime Minister Tony Blair called Motorola Chief Executive Christopher Galvin to discuss the company's plans for Scotland, amid reports that the No. 2 cell-phone maker plans to fire 3,200 workers and close a factory at Bathgate, near Edinburgh.

"The prime minister spoke with [Galvin] for about 15 minutes this afternoon and encouraged him to keep the jobs in Scotland," spokeswoman Tanya Joseph said. She declined to say whether Motorola had confirmed the job cuts.

Motorola declined to comment on the Edinburgh Evening News report, which said that the 3,200 job cuts would be part of the 22,000 positions it will shed globally, including 7,000 in Britain.

The company is being battered as demand drops for cell phones and semiconductors.

"We don't comment on rumor and speculation; no decisions have been made," said Mark Durrant, UK corporate communications manager.

"We're in consultation with employees. We're likely to know by the end of the second quarter," Durrant said.

Labor leaders were expecting an announcement about the factory, but did not know the details, the paper said.

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