MOT may have beat Street expectations but the future may not look that good for the balance of the year.
Below is selected material from earnings statement, source is listed at the bottom.
Mot's Robert L. Growney, president and chief operating officer, said, ''As we indicated last month, the second-quarter results reflect further slowing of demand and continuing global pricing pressure, principally in the Semiconductor Products and Messaging, Information and Media segments and driven primarily by economic conditions in Asia,'' he said.
''The goal of our renewal plan,'' Growney continued, ''is to generate annualized savings, once all actions have been implemented over the next 12 months, of more than $750 million. We expect to see the positive impact of these savings to steadily increase over the next several quarters.''
Cellular Products Segment sales declined 1 percent and orders were down 11 percent.
Cellular Subscriber Sector sales and orders declined. Sales and orders significantly lower in Asia.
Cellular Infrastructure Group sales increased while orders were significantly lower.
Semiconductor Products Segment sales decreased 11 percent to $1.81 billion and orders were down 25 percent.
Land Mobile Products Segment sales increased 18 percent, orders rose 12 percent and operating profits increased.
Messaging, Information and Media Segment sales declined 32 percent and orders were down 35 percent.
Automotive, Component, Computer and Energy Sector Sales declined 9 percent and orders were down 15 percent.
Space and Systems Technology Group Sales declined 36 percent, orders were 30 percent lower.
General Corporate
Manufacturing and other costs of sales were 71 percent of sales, compared with 67 percent in the second quarter of 1997. Increased pricing pressures were experienced in several business segments and were due to a variety of factors including weakened Asian currencies and reduced demand.
Selling, general and administrative expenses were 19 percent of sales compared with 17 percent in the year-earlier period, largely as a result of lower sales.
Depreciation expense decreased slightly as a percent of sales. Interest expense increased slightly as a percent of sales. The tax rate for the second quarter was 30 percent versus a 35 percent tax rate a year ago.
Review and Outlook
Christopher B. Galvin, chief executive officer, said conditions in the whole semiconductor industry worldwide and general business conditions in Asia weakened further in the second quarter. ''The currency-related impact on pricing and consumer confidence continues to affect the Asian region and Motorola. Significant efforts to stabilize the region by the International Monetary Fund and various governments have not yet proven successful. The negative impact on our business is likely to continue for at least the remainder of the year,'' he said.
''To respond to the severity of these business conditions, we are resizing the company through aggressive restructuring steps announced last month. These actions are intended to improve our long-term profitability and efficiency.
''In the next few days we will announce a more collaborative and market-focused Communications Enterprise that links together all of Motorola's communications businesses so they can easily share resources and cooperate on key business and technology issues. At the same time, it will realign individual businesses so they can quickly and more efficiently direct Motorola's diverse core competencies toward winning solutions, as the convergence of wireless technologies continues,'' Galvin said.
source : biz.yahoo.com
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