MOT ($16) EPS -.2....Earnings in-line..On Conference call, company lowers overall industry handset unit sales to 380-400 mln from 400-425 mln mentioned on Q2 call. Company establishes 2002 estimate at 420-460 mln. "Inventories have normalized."
Company provides guidance for PCS segment. Sales and operating margin will increase sequentially in Q4. For semiconductor segment, sales should be flat sequentially with a slightly smaller operating loss.
Tuesday October 9 7:49 PM ET
Motorola Posts Third Consecutive Loss
By Ben Klayman
CHICAGO (Reuters) - Wireless technology giant Motorola Inc. (NYSE:MOT - news) on Tuesday said it lost $1.4 billion in the third quarter -- its third consecutive quarterly loss -- as it continued to face declining demand for its wireless telephones and semiconductors amid the global telecommunications slowdown.
The company said its net loss was 64 cents a share, including one-time pretax charges of $2 billion, or 57 cents a share after taxes. That compared with a profit of $531 million, or 23 cents a share, in the year-ago quarter.
Motorola lost about $1.3 billion during the first two quarters of this year.
The company, based in the Chicago suburb of Schaumburg, Illinois, said its wireless phone unit returned to profitability in the third quarter, a quarter ahead of schedule. The business gained two percentage points of global market share versus a year ago to between 17 to 18 percent.
The wireless phone business posted a $19 million operating profit, up from losses in the previous two quarters, but sales were down 16 percent to $2.7 billion due to lower demand from telephone companies, and orders fell 12 percent.
Analysts said the results generally came in as expected, but they will be listening closely to company executives during a conference call on Wednesday morning for any future guidance for the fourth quarter and beyond.
``What kind of guidance do they provide sequentially, when do they see semiconductors ever getting back to profitability, what are their views on (wireless) infrastructure and broadband, and more changes strategically in terms of product,'' Deutsche Banc Alex. Brown analyst Brian Modoff said.
J.P. Morgan H&Q analyst Ed Snyder added Wall Street was looking for ``no bombs'' during the call. He said he expects financial guidance on the fourth quarter, but does not think Motorola will provide any for 2002.
Motorola Chairman Christopher Galvin said the U.S. economy had been near a turnaround but the Sept. 11 attacks in New York and Washington that left more than 5,500 dead or missing.
``Until...Sept. 11th, our predictive indicators seemed to indicate that the world would most probably return to more positive economic growth in the first or second quarter of 2002,'' he said in a statement.
Galvin said the attacks and the military response by the United States and its allies made forecasting challenging, but the negatives will be offset by the near-term stimulus of tax relief, interest rate reduction and massive infusion of liquidity by government authorities.
``Nonetheless, calling the specific timing of a broad economic turnaround is difficult,'' he added.
Motorola posted a third-quarter operating loss, in line with its September guidance, of $153 million, or 7 cents a share, compared with a profit of $643 million, or 28 cents a share, in the year-ago period.
``You can't say this was a great quarter or they've turned a corner,'' said Tim Ghriskey, senior partner at Ghriskey Capital Partners llc, a Greenwich, Connecticut-based investment management firm.
Analysts had expected Motorola to lose 7 cents a share, with estimates of the loss ranging from 6 cents to 10 cents, according to Thomson Financial/First Call.
Sales in the quarter ended Sept. 29, as expected, dropped 22 percent to $7.41 billion from $9.49 billion last year.
Motorola said last month it would post a third-quarter operating loss of 5 to 8 cents a share. It also said sales would be flat with the second quarter's $7.5 billion due to weak wireless network equipment and semiconductor markets.
The charges in the quarter were mostly for investment impairments, cost-reduction activities and about $1.3 billion in additional reserves relating to a defaulted $2 billion loan to Telsim, a cellular operator in Turkey. These charges were partially offset by a gain from the sale of a business.
Motorola also said it reduced its net debt by $2.4 billion and generated positive cash flow of about $200 million during the third quarter.
Motorola, which is in the process of cutting almost 22 percent of its work force by the end of this year, has slashed sales forecasts amid general gloom in the telecom sector.
Along with rivals Nokia (news - web sites) (NOK1V.HE)(NYSE:NOK - news) of Finland and Sweden's Ericsson (news - web sites) (ERICb.ST)(Nasdaq:ERICY - news), it has been hit by a slowdown in demand for wireless phones and infrastructure, compounded by management missteps.
Another major Motorola business, semiconductors, posted an operating loss of $355 million compared with a profit of $202 million last year. Sales fell 48 percent to $1.1 billion, while orders declined 49 percent.
Motorola's stock closed off 67 cents, or 3.85 percent, at $16.72 on the New York Stock Exchange (news - web sites) before the quarterly results were announced.
Over the past year, however, the stock has outperformed Nokia's American depositary shares by about 34 percent, as well as its peers in the Standard & Poor's Communications Equipment index (^SPCOMM - news) by about 220 percent.
The third-quarter earnings results from Motorola will be followed by those of Nokia, the world's largest mobile phone maker, on Oct. 19, and Ericsson, the third largest, on Oct. 26.
Nokia warned last month it would miss its sales guidance of flat to 5 percent growth in the third quarter, and said its revenues would be 5 percent lower than last year.
Ericsson, merging its mobile-phone unit with that of Japan's Sony Corp (news - web sites). (6758.T) in a bid to survive the increasingly cutthroat competition, said last month the telecom industry was unlikely to recover next year. |
