Motorola Reports Fourth-Quarter, Full-Year Sales and Earnings
SCHAUMBURG, Ill.--(BUSINESS WIRE)--Jan. 10, 2001--Motorola, Inc. (NYSE:MOT - news) today reported sales of $10.1 billion in the fourth quarter of 2000, an increase of 11 percent from $9.1 billion a year earlier. Excluding special items, earnings were $335 million, or 15 cents per share, down 41 percent from $564 million, or 25 cents per share a year ago.
Including special items, earnings were $135 million, or 6 cents per share, compared with $323 million, or 15 cents per share a year ago. The 1999 figures are restated to reflect the merger with General Instrument Corporation and the June 1, 2000 3-for-1 stock split.
Robert L. Growney, president and chief operating officer, said, ``Despite the higher sales, increases in manufacturing costs and operating expenses caused operating profits to decline. We have taken steps to reduce the cost structure in our manufacturing activities and to tightly control operating expenses. Further steps will be taken in 2001 to return the corporation to generating growth in its earnings.''
In the fourth quarter of 2000, Motorola reported special items resulting in a net charge of $68 million pre-tax, or 9 cents per share after-tax. Charges were incurred primarily relating to the discontinuation of older wireless telephone products as part of an ongoing product portfolio simplification strategy and the downsizing of various manufacturing operations. The charges were largely offset by gains from the sale of investments during the quarter. In the fourth quarter of 1999, the company reported special items resulting in a net charge of $351 million pre-tax, or 10 cents per share after-tax.
For the full year, sales from ongoing operations rose 17 percent to $37.6 billion from $32.0 billion in 1999. Including sales from businesses sold in 1999, sales increased 14 percent from $33.1 billion a year ago. Full-year earnings from ongoing operations, excluding special items, were $1.9 billion, or 84 cents per share, compared with $1.4 billion, or 63 cents per share a year earlier. Including the earnings from businesses sold in 1999, full-year earnings were up 29 percent compared with $1.5 billion, or 67 cents per share a year earlier.
Results for Ongoing Operations, Excluding Special Items
Excluding special items, a comparison of results from ongoing operations is as follows:
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Personal Communications Segment
Segment sales rose 1 percent to $3.5 billion. Orders were $2.9 billion, down 20 percent. Operating profits declined to $76 million, compared with $242 million a year ago, due to increased manufacturing costs.
In the Americas, orders for wireless telephones increased, while sales were significantly higher. In Europe, orders were down very significantly, while sales were down significantly. In Asia, orders and sales increased.
Motorola has accelerated actions to improve financial results in this segment. In the previous two quarters, Motorola has taken significant steps to realign the segment to respond to changes in the market and to improve the existing cost structure. The focus has been on product simplification and restructuring of the supply chain.
In Europe, Motorola began shipping the V.Series(TM) V100 personal communicator, which combines a Global System for Mobile Communications (GSM) phone with a full keyboard, Internet browser, address book, games and voice dialing. In the U.S. the Timeport(TM) P7389i wireless phone was introduced. This GSM tri-band phone features General Packet Radio Services (GPRS) technology to provide a constant link to the mobile Internet. The V.Series model 60c phone also was unveiled. It features messaging, external caller ID, voice activation and a Wireless Application Protocol microbrowser.
Sega Corp. and Motorola signed an agreement that calls for Sega to develop games for Motorola wireless devices.
Global Telecom Solutions Segment
Segment sales increased 19 percent to $2.1 billion and orders rose 5 percent to $1.8 billion. Operating profits declined to $193 million, compared with $245 million a year ago, due to increased research and development and selling expenses.
In the Americas and in Europe, orders were lower, while sales increased. In Asia, orders were significantly higher and sales increased.
Motorola announced several agreements to supply third-generation (3G) networks capable of providing advanced multimedia services. These include Universal Mobile Telecommunications Systems (UMTS) for Telefonica Moviles in Spain and Telsim in Turkey, as well as cdma2000 1x network upgrades with KDDI in Japan, Sprint PCS in 13 U.S. markets and ALLTEL in Louisiana and Arizona.
In China, Motorola received more than $130 million in GSM network expansion contracts for systems in Sichuan, Fujian and Zhejiang provinces. China Mobile Communications Corp. also awarded Motorola a GPRS network supply contract for Beijing, Tianjin, Chengdu and Hangzhou.
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Review and Outlook
Christopher B. Galvin, chairman and chief executive officer, said, ``We are making the adjustments that are necessary in a period of slower overall economic growth. Having anticipated a softening in economic activity, we began implementing cost reductions in the third and fourth quarters of 2000, and will continue with additional actions to be taken in the first quarter of 2001. These actions have been designed to adjust our costs to softening global market conditions and, as the market recovers, to restore the trend of improved profitability that we had achieved over the last two years,'' he said.
``Despite a slowdown in the growth of overall consumer spending, we expect demand for wireless, broadband, and workgroup equipment and services to grow as individuals continue to be attracted to broadband's triple play of voice, data, and multimedia and the convenience of portable communication products. Growth in embedded devices has slowed in most segments, but the demand for embedded systems that make our customers' products simpler, safer, smarter and more synchronized remains strong in the long term,'' Galvin said.
``Business customers are assessing the recent changes in global debt markets and capital availability as they focus their near-term capital investments. The robustness of business activity in this economic cycle for companies like Motorola over the next few quarters will be largely determined by the level of success of further change in fiscal, tax and regulatory policy worldwide. We are still in the early phase of this change in economic cycle. Therefore, its pace and direction is not firmly predictable. Motorola has managed successfully through economic cycles in every decade since its founding in 1928. We remain more enthusiastic than ever about the benefits to society and our shareholders of wireless, broadband, Internet and embedded solutions tailored uniquely for the person, workteam, home and automobile, powered by embedded systems,'' he said.
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