The 1-2 punch to the market, can she take it?: The MOT story:
Impact of Weakened Asian Currencies To Affect Motorola's First
Quarter Results - Business Wire - March 05, 1998 18:03
SCHAUMBURG, Ill.--(BUSINESS WIRE)--March 5, 1998--Motorola, Inc.
said today its first quarter 1998 sales are expected to be about the
same as those for the first quarter a year ago, primarily because of
the effects of weakened Asian currencies. Earnings are expected to be
well below the expectations of the investment community.
Although the Company said in January that it hoped the efforts of the
International Monetary Fund and others might help stabilize Asian
consumer confidence, with the exception of China, that does not appear
to have occurred. Motorola is experiencing deflationary currency- influenced price competition coupled with traditional industry price
competitiveness and certain semiconductor industry segment slowdowns
that produced weaker than expected January and February results.
Motorola expects that the most significant contributor to the
shortfall of the Company's first-quarter results will be its
Semiconductor Products Sector. The Sector's Consumer Systems Group
and Components Group have been affected by significant softness in
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 this period of slower growth. More
normal growth rates and pricing are being experienced in the Sector's
Networking and Computing Systems, Wireless Subscriber Systems and
Transportation Systems Groups.
Despite recent improvements in order patterns for the Company's paging
business in China, order levels in Asia were lower than normal
seasonal levels prior to the advent of the Chinese New Year. This has
affected first-quarter shipment potential.
Although Motorola's Cellular Infrastructure Group is experiencing
solid results in sales and orders in much of the world, particularly
in Japan and the Pan America region, there has been a significant
slowing of business in those Asian countries most affected by currency
devaluations.
The Cellular Subscriber Sector continues to experience positive
momentum in the sales of its digital handset products due to its
improving position in the Global System for Mobile Communications(GSM)
market and its recent introductions of new products in the Code
Division Multiple Access (CDMA) and Time Division Multiple Access
(TDMA) markets. However, a weakening of demand is being felt in the
United States. In addition, analog handset sales in the U.S. are
declining as a result of an accelerating trend of demand shift from
analog to digital products. A competitive pricing environment for
digital handsets is developing as those manufacturers who benefit
competitively from the Asian currency devaluation put greater than
historical pressure on pricing globally, but particularly in Asia.
Although the Company sees some signs of these overall economic issues
abating, it is unable to forecast the specific timing or rate of the
economic recovery. Motorola remains fully committed to its long-term
prospects in Asia and is taking cost and capital spending control
measures in the short term.
Business Risk: The statements contained in this announcement that are
not historical, including statements about expected sales and
earnings, the competitive pricing environment for digital handsets,
and the outlook for Asia are forward-looking and involve risks and
uncertainties. Factors, including the various efforts to stabilize
economic conditions in Asia; the potential that the impact of weakened
currencies in Southeast Asia could spread to countries where the
Company does a sizable amount of business, including China and Japan;
the impact of weakened currencies in Southeast Asia on economies
outside of Asia; the ability of Motorola's cellular businesses to
continue to transition to digital technology and successfully gain
market share; and the factors in Motorola's 10/K-A on pages 14 and 15
of Item 7 and in other SEC filings, could cause (and in some cases
have caused) Motorola's results to differ materially from those stated
in this announcement.
Note: A brief conference call for the investment community will begin
at 8:30 a.m., Eastern Standard Time on Friday, March 6, 1998.
Participants can access the call by dialing 973-633-1010. The call is
also available to the media, but questions will be restricted to the
investment community. A taped replay of the call will be available
until 5 p.m., EST, on Monday, March 9, by dialing 402-220-9943.
CONTACT: Motorola
Albert R. Brashear, 847/576-5305
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