From the WSJ: MOT's warning along with the Jobs data tomorrow could make for one interesting Friday.
Rory
Motorola Plans a Massive Charge
Of $1.95 Billion, Slashes 15,000 Jobs
An INTERACTIVE JOURNAL News Roundup
Motorola Inc. announced a huge charge and said it would cut 10% of its
global work force, slashing 15,000 jobs, as it attempts to right a formerly
profitable ship that has been cruising dangerously close to the rocks of late.
The Schaumburg, Ill., maker of computer hardware and consumer
electronics said it would take pretax charges totaling $1.95 billion and
would report an operating loss for the period. The company also said the
job cuts will take place over the next 12 months.
Motorola said the charges were the result of slowing demand and pricing
pressure in the global market for semiconductors, an all-too-common
complaint from chip makers lately. Motorola said many of the problems
were related to the financial problems in Asia over the past year.
The company said that as a result of the
problems, its net income would be well below
the estimates of Wall Street analysts, and the
company will likely post an operating loss for the second quarter.
According Zacks Investment Research, analysts had expected net income
of 25 cents a share for the second quarter, which ends June 30, and $1.55
a share for fiscal 1998.
The company said that as part of the restructuring effort, it plans to
consolidate its manufacturing operations, exit poorly performing
businesses, and to write down impaired assets.
In a statement released after regular stock-market trading ended,
Motorola noted that it previously had expected to see higher sales growth
and improved profits in 1998, but added that market conditions have
prevented that from occurring.
"It is clearly time to accelerate the implementation of our renewal plan," the
company said. "We are determined to return our financial results to an
acceptable level as soon as possible. The goal is to generate annualized
savings, once all actions have been implemented, of more than $750
million."
"While we very much regret the impact this will have on certain of our
employees, we must adjust our production capacity to the reality of current
business conditions and reduce costs to improve overall financial
performance," said Christopher B. Galvin, the company's chief executive
officer.
In New York Stock Exchange composite trading Thursday, shares of
Motorola rose 68.75 cents to $51.50. The announcement was made after
the close of trading. |
