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To: rudedog who wrote (159141)	8/3/2000 10:49:32 AM
From: D.J.Smyth	Read Replies (1) \| Respond to of 176387

rude, re early market drop what helped the market drop today was CNBC and analysts' comment (Maria wouldn't name her "sources") regarding Motorola's cellphone production. analysts had predicted 100 million cellphones for next year. Motorola met with suppliers and stated that they don't see any current chip production problems and will probably need 80 to 85 million. Maria jumped all over this this a.m. what she failed to say was that even at 80 to 85 million cellphones (they generally beat their numbers, nonetheless, by at least 10% to 15%), it represents nearly a 20% increase over production by Motorola over the past twelve months. NOK's number of expected 150 to 160 million cellphones reamins unchanged - showing a marked increase. Maria stated that since Motorola gave a "rosy" picture at last week's analysts' meeting and then gave this 80 to 85 million figure, it could discredit the entire market (nearly verbatim her words). i don't think Maria understands cellphone production. Motorola's strength lies in many areas including pagers, handhelds and infrastructure. We'd rather have a profitable Motorola producing 90 million handsets than an unprofitable one attempting to grab market share from Nokia producing 100 million. They can't, yet, broadly compete with NOK in Europe. I'm think she apparently listens to a few individuals who are short the broad market because Luke and McKechnie in the following article paint a completely different picture than the picture Maria was painting this morning. She basically implied that Motorola was lying at last weeks conference. This news was carried to the other financial channels and down the S&P futures went - from 8 to 14 (after her report). yahoo.cnet.com Morotola slides on production warning By Sandeep Junnarkar Staff Writer, CNET News.com August 3, 2000, 6:55 a.m. PT Shares of Motorola slipped lower this morning after the world's second largest cellular phone maker warned that it would produce fewer handsets than expected this year. Motorola stock fell $1.88 or 5.12 percent to 34.75 this morning. The stock has traded as high as and as low as during the past 52 weeks. Lehman Brothers analyst Tim Luke said Motorola told its suppliers that it would produce 80 million to 85 million handsets in 2000, compared to its previous goal of 100 million units. In a report this morning, Luke noted that the lower production levels to some extent reflect the company's focus on ensuring it delivers on its goal of improving its cell phone operating margins to 10 percent in the fourth quarter. "Motorola now appears to be emphasizing improved margins and profitability over higher unit shipments and market share gains," Luke wrote. Earlier this week, Motorola held its annual analysts' meeting that moved five analysts to issue bullish reports on the wireless communications company. At the time, Banc of America Securities analyst Mark McKechnie wrote in a report that he believed Motorola was "getting it together" in handsets. Lehman' Brothers' Luke agrees with McKechnie's earlier assessment. "(This) revised guidance for the handset suppliers is firmly in line with the targets outlined at this week's analyst meeting and with our own estimates," he wrote. Luke is retaining his estimates for Motorola's global handset demand of 423 million, in line with the company's own estimate of between 425 million and 450 million.