I've had a chip on my shoulder about MOT since I graduated college. They flew me down to Chicago for an interview but sent me a "Dear David" letter. Would have been a bad move anyway and the grapes are very sour in Chicago.
From SmartMoney: - Thank God management has Asia to blame.
MOTOROLA WILL DISAPPOINT, TOO
SCHAUMBURG, Ill. -(Dow Jones)- Motorola Inc. late Thursday warned it will post first-quarter net income "well below" Wall Street expectations as sales will remain flat with year-ago figures, the result of weak Asian currencies. The weak sales, which Motorola tied primarily to slack semiconductor demand, are in sharp contrast to the 10% sales increase predicted earlier this year by the company's
top executive.
The disappointing outlook, announced after the close of U.S. markets Thursday, followed a sell-off on Wall Street sparked by a similar announcement by high-tech bellwether Intel Corp. late Wednesday.
Investors didn't want to wait until Friday to show their displeasure. In after-hours trading, shares of Motorola (MOT) were off $4.563, or 8.2%, at $51.125. The New York Stock Exchange-listed shares closed at $55.688 in regular trading, up 6.3 cents from Wednesday's close.
The Schaumburg, Ill.-based maker of semiconductors and electronic systems said that outside China, consumer confidence in Asia hasn't stabilized, despite the International Monetary Fund bailout. As a result, Motorola said it is experiencing "deflationary" currency-influenced price competition that, along with typical industry price pressure and semiconductor-industry slowdowns, produced weaker-than-expected January and February results.[ED.(ie DMA) WHAT BS]
Wall Street expects Motorola will earn 47 cents a diluted share in the quarter ending March 31, according to a survey of 29 analysts by First Call. The mean analyst estimate for all of 1998 is for earnings of $2.74 a diluted share.
In the year-ago first quarter, Motorola earned $325 million, or 53 cents a share, on revenue of $6.6 billion.
Motorola said its semiconductor-products sector will contribute the most to the first-quarter shortfall. The sector's consumer-systems and components groups have been hurt by soft demand in Asia and increased price pressure in most other regional semiconductor markets as competitors seek to maintain unit volume production and market share during the current period of slower growth.
In Asia, the timing of the Chinese New Year also hurt first-quarter shipment potential, Motorola said.
The company's cellular infrastructure group is experiencing solid results in sales and orders in much of the world, especially Japan and the Pan America region. But business has slowed significantly in the Asian countries hardest hit by currency devaluations, Motorola said.
Althoug digital handset products are showing sales momentum, demand is weakening in the U.S., and manufacturers who benefit from the Asian devaluation are putting greater-than-historical pressure on
global pricing, especially in Asia. Also, analog handset sales
in the U.S. are declining because of the shift to digital products.
Motorola said, however, it remains fully committed to Asia, and is taking cost-control and capital-spending control measures in the short term.
The outlook marks the second time this year that Motorola has provided a disappointing report on the damage done by the swooning Asian markets. In January, the company reported fourth-quarter earnings that fell below analysts' expectations, fueled by falling cellular-phone sales in Asia and a significant drop in major orders for cell-phone
systems.
At that time, Christopher Galvin, Motorola's chief
executive officer, said he expected the damage from falling
currencies and punishing debt burdens in Asia to be limited.
Galvin added in January that he expected sales growth "in
the range of 10%" in each of the first two quarters of 1998,
compared with year-earlier periods.
Earlier Thursday, Motorola said the Federal
Communications Commission approved the $100 million
sale of Motorola Inc.'s Ardis wireless messaging network to
American Mobile Satellite Corp.
The deal, announced late last year, is expected to close by the end of this month. Ardis, originally developed by Motorola and International Business Machines Corp. (IBM) in the late 1980s, was the nation's first and remains its largest network for two-way data transmission. It covers some 425 major cities and is used primarily by businesses such as trucking concerns and others to send and receive data to employees on the road.
For American Mobile, Reston, Va., the acquisition of Ardis gives it a ground-based wireless system that complements and expands the satellite voice and data communications service it currently provides. Like Ardis's customers, American Mobile's are principally businesses.
For Motorola, the sale achieves a long-held objective of
getting out of the business of operating communications
networks in North America. The company prefers making
and selling equipment for such networks in North America,
rather than running them; it remains a big operator of
wireless systems in developing countries.
The move fits in with Galvin's efforts to streamline and
refocus Motorola's sprawling operations. The company has
struggled lately because of fierce competition in some of its
principal markets, such as cellular phones. |
