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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (6038)	10/10/2002 12:04:50 AM
From: Return to Sender	Respond to of 95383

Motorola Shares Fall on Sales Worries Wednesday October 9, 7:58 pm ET By Yukari Iwatani biz.yahoo.com CHICAGO (Reuters) - Shares of wireless technology giant Motorola Inc. (NYSE:MOT - News) fell as much as 17 percent to a near 10-year low on Wednesday on fears that the company may miss its sales estimates for the fourth quarter and 2003 due to weakness in the semiconductor and infrastructure markets. Lehman Brothers analyst Tim Luke said in a research note that Motorola might be hurt by a slower-than-expected recovery in the semiconductor industry as well as a weak wireless infrastructure industry. Analysts said that helped to drive shares down as semiconductors and infrastructure equipment are two of Motorola's largest businesses. "People are smoking something if they think (Motorola) is going to do 45 cents next year," an investment fund technology analyst who follows Motorola closely said of the Chicago area-based company's expected 2003 earnings. Motorola's stock traded as low as $8.08 before closing off $1.45 at $8.30 on the New York Stock Exchange on Wednesday. It has fallen 45 percent since the beginning of the year while Standard & Poor's telecommunications equipment index has fallen 65 percent. "Bearish sentiment, fear, uncertainty and doubt are ruling the day," said Edward Snyder, wireless equipment analyst with J.P. Morgan. "I don't think there's any fundamental (issues) with the company," he said, adding that Motorola's results should be improving. Motorola has been struggling with a slowdown in the industry for the last 18 months as telecommunications companies have cut back on capital spending. The company has aggressively cut jobs and restructured the organization in order to return to profitability after a string of losses. In July, Motorola posted an earlier-than-expected quarterly profit before charges. CELL PHONE UNIT Motorola's cell phone unit -- its largest -- is seen to be improving, reflecting a healthier handset market. However, those gains may not be enough to offset weakness in the semiconductor and infrastructure businesses. Already, Motorola rivals Nokia (NOK1V.HE) (NYSE:NOK - News) and Ericsson (Stockholm:ERICb.ST - News; NasdaqNM:ERICY - News) have cut their sales estimates for the third quarter, citing weak demand for mobile network equipment. The chip sector, which had its worst-ever year in 2001, continues to be plagued by depressed orders from computer and telecom equipment makers. Luke cut his fourth quarter sales estimate on Motorola to $7.35 billion from $7.5 billion although he kept his earnings estimate at 13 cents. He cut his 2003 earnings forecast to 41 cents from 43 cents and he reduced his sales expectation to $27.9 billion from $28.6 billion. "In general we remain encouraged by Motorola's progress on its restructuring programs .... Near term upside fueled by deeper restructuring initiatives, however, may now be more limited until visibility begins to improve on the macro environment and key markets such as semiconductors, cable and wireless infrastructure," Luke said. Motorola had said in September that it continued to expect fourth-quarter earnings, before one-time items, of 14 cents on sales of $7.5 billion. It expected 2003 sales of $29 billion and said analysts expectations for earnings, before one-time items, of 45 cents a share were "achievable." Deutsche Bank Securities analyst Brian Modoff, who just lowered his expectations for the infrastructure industry, said he was not surprised by Luke's changes. "Clearly it's a situation where (Motorola's) guidance may have to be trimmed back a little," he said. Modoff has a "sell" investment rating on Motorola. Analysts are expecting Motorola to post results in line with estimates for the third quarter when it reports its results on Oct. 15. The company has repeatedly stood by its third-quarter earnings forecast of 5 cents a share, excluding one-time items, on revenue of about $6.7 billion. (Additional reporting by Ben Klayman in San Francisco)