Motorola (MOT): 126 -25: A good press release followed by a bad conference call. That pretty
much sums up this quarter's earnings reporting period for Motorola. After the close yesterday,
Motorola posted first quarter net of $0.59 per share, excluding items, which was a penny better than
the First Call estimate, and versus a year-ago profit of $0.26; sales rose 20% to $8.77 billion. Each of
its business segments, in fact, showed double-digit sales gains with its four core segments-- Personal
Communications, Network Systems, Semiconductor, and Commercial, Government, and Industrial
Systems-- posting year-over-year gains of 24%, 11%, 24%, and 16% respectively. Motorola's
Broadband Communications business, which has taken on heightened appeal in the wake of the
company's acquisition of General Instrument, saw sales jump 15% to $678 million. Admittedly, some
analysts were looking for a little better growth in the Personal Communications segment, but any
disappointment seemed to be overshadowed by the fact that the results at Motorola's Semiconductor
business were above expectations. After this morning's conference call, however, the focus is clearly
back on the Personal Communications business as Motorola acknowledged that the shift to
lower-tiered products with smaller margins that had been seen in Q1 was going to persist into Q2.
Because of that, Motorola said it expects to record Q2 earnings of $0.67 per share and full-year
earnings of $3.14 per share. Consensus earnings estimates are $0.70 and $3.18 respectively.
Revenues, meanwhile, are projected to reach $9.5 billion in the second quarter and $39.8 billion for
FY00 which would represent year-over year growth of 26.7% and 28.8%. Of course, lost in the
shuffle is the fact that Motorola's revised full-year guidance is still two cents ahead of the guidance it
provided following its fourth quarter earnings conference call. In the current environment, though, there
is no room for error-- or perceived error. Thus, a positive earnings surprise has quickly turned into a
disappointing earnings warning and Motorola is paying the price for it-- too much of a price in our
opinion. Nevertheless, even though positive guidance was given for many of its other businesses, the
emphasis now is being placed on what is bad, not what is good.-- PJO
from briefing.com
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I see MOT is down 25 points.
Jack |
