re: MOT leads off Wireless Earnings Week
* Motorola Tuesday July 16
* Nokia Thursday July 18
* Ericsson Friday July 19
Next week:
Qualcomm Thursday July 25
>> Market Awaits Clues On Motorola Rebound
Yukari Iwatani
July 12, 2002
Reuters
With most of its restructuring out of the way, all eyes will be focused on demand for Motorola Inc.'s key products -- mobile phones and semiconductors -- when it reports second-quarter earnings next week.
The world's No. 2 mobile phone maker, behind Finland's Nokia, is expected to report its sixth consecutive quarterly operating loss on Tuesday.
Analysts believe Chicago area-based Motorola will post results in line with expectations thanks to cost cuts. But they are also looking for signs of a rebound in demand, particularly in mobile phones, allowing the company to post a profit for the full year, as it has repeatedly indicated.
"I'd like to hear something that says (demand for) worldwide handsets have stabilized and is beginning to grow," said Henry Asher, president of New York-based money manager Northstar Group.
Along with Nokia and Sweden's Ericsson, Motorola has suffered from a slowdown in demand for cell phones and wireless infrastructure. Meanwhile, the weak economy has hurt the company's automotive electronics, semiconductor and broadband businesses.
Since August 2000, Motorola has slashed its work force by more than a third from its peak of 150,000. The company said last month it will cut 7,000 more jobs, bringing it to 93,000.
Shares of Motorola have fallen nearly 79 percent since reaching a high of $61.54 in March 2000 on the New York Stock Exchange. The stock was up 17 cents at $13.62 Friday morning.
'A Very Unforgiving Market'
Analysts on average expect Motorola to report a second-quarter loss of 4 cents a share, according to Thomson First Call. Loss estimates range from a penny to 5 cents.
In the year-earlier period, Motorola posted an operating loss of $232 million, or 11 cents a share. The company said in June it was confident about meeting or slightly beating its expectations of a 4 cent loss and sales of $6.4 billion.
Nokia will report results on July 18 and Ericsson, the world's largest maker of wireless network equipment, on July 19.
Motorola is expected to be generally upbeat in its earnings report, but analysts and investors said that may not be enough to boost confidence.
For one thing, the company is expected to take about a $3.5 billion charge in the quarter, essentially ending its massive downsizing.
"This is just a very unforgiving market for people who don't have fairly straightforward numbers," said Walter Casey, co-manager for Bank One Investment Advisor's technology fund.
Added Matthew Hoffman, analyst with SoundView Technology, "It's going to be a tough environment. You're more hoping that they don't make a mistake."
Concern About Weak Industry Demand
Analysts said they were concerned about indications from Nokia of weak demand for mobile phones and networks. The company said last month it expected to post a decline in second-quarter net sales instead of an increase and cut its forecast for sales in the second half of the year.
Ericsson has also said it sees a prolonged downturn in demand for telecommunications equipment.
Jeffrey Schlesinger, analyst with UBS Warburg, said in a research note that cell phone orders might be weak due to a seasonally slow summer period, inventory control by wireless operator customers and delays in shipping advanced cell phone models capable of surfing the Web.
Fewer consumers are replacing their cell phones with new models. Mobile phone companies depend on sales of replacement phones, especially in mature markets like Europe, where over 70 percent of the population owns cell phones.
Beyond phones, analysts said they will be looking for signs of the long-awaited turnaround in the semiconductor business. The industry has remained sluggish even though Motorola is believed to be doing a solid job of cutting costs.
The infrastructure unit, which makes equipment for wireless networks, is expected to continue to be weak, but analysts said they would look for more details on its restructuring plan. Motorola has said it wants to find a partner for that business.
"All the bad news is already in infrastructure," Edward Snyder, analyst at J.P. Morgan, said. "The good news is they're going to cut it ... I expect
we'll see a little more detail." <<
- Eric - |
