Motorola forecasts a loss in 4th quarter

Analysts expected a profit

company to cut 7,000 more jobs

October 11, 2001|By BLOOMBERG NEWS

SCHAUMBURG, Ill. - Motorola Inc., the second-biggest maker of mobile phones, surprised some analysts yesterday by forecasting a quarterly loss, its fourth straight, and boosted planned job cuts this year by 7,000, to 39,000.

The loss, excluding unspecified items, will be 4 cents to 5 cents a share, Motorola said.

President Robert Growney said 4,000 additional jobs will be pared by selling businesses, and 3,000 more will be eliminated, some through attrition.

Motorola is heading to its first annual loss, before reorganization charges, in at least 46 years, and some investors say they're frustrated with Chief Executive Officer Christopher Galvin, grandson of the company's founder. Galvin, who is trimming 27 percent of Motorola's work force, should consider options for businesses where the company trails rivals, one investor said.

"They need a vision to either be No. 1 or 2 or get out," said money manager Steve Mygrant of Fifth Third Bancorp, which held about 376,000 Motorola shares as of June 30.

"They've just got to execute in a better fashion."

He cited the cellular network and semiconductor businesses as areas in which Motorola may trail competitors.

Motorola's mobile-phone business, which ranks behind Nokia Oyj, was the third-quarter's bright spot, as sales and profit exceeded forecasts, analysts and investors said.

Mike Zafirovski, president of the unit, the company's largest, said Motorola's market share increased to 17 percent to 18 percent. That's up from about 15 percent in the second quarter.

Motorola predicted that 380 million to 400 million wireless phones will be sold worldwide by manufacturers in 2001, down from earlier forecasts of 400 million to 425 million.

Motorola's shares rose 19 cents yesterday to close at $16.91.

Analysts expected Motorola to post a profit of a penny a share in the fourth quarter. The company said its fourth-quarter sales from ongoing operations will be unchanged to up 3 percent from the third quarter.

Spokesman Scott Wyman declined to say which businesses are included in "ongoing operations."

On Tuesday, Motorola reported a third-quarter loss of $1.41 billion, or 64 cents a share. Revenue fell 22 percent to $7.41 billion.

In the year-ago fourth quarter, Motorola posted sales of $10.1 billion and profit excluding certain items of 15 cents a share.

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