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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Jimbo who wrote (10013)	6/4/1998 11:54:00 PM
From: Jenna	Read Replies (1) \| Respond to of 120523

ANALYSIS-Motorola takes big steps to boost profits ... may cause some problems in tech sector tomorrow.. My watch list is late but it will contain many stocks NOT in the tech sector just in case of some pressure there tomorrow. By Jane Light CHICAGO, June 4 (Reuters) -The sweeping plan announced by Motorola Inc.<MOT.N> to cut costs and fuel profits might finally stem a deteriorating trend at the huge semiconductor and telecommunication products company. "It's even bigger than expected, which is good. This is large enough to be meaningful for the company. The question is, strategically, when will it really take effect?" said Mona Eraiba, telecommunications industry analyst at Gruntal & Co. Late Thursday, Motorola announced major restructuring initiatives aimed at generating annualized savings of more than $750 million once the entire plan is implemented. The company will consolidate manufacturing operations, cut costs, slash 15,000 jobs or 10 percent of its work force, exit some underperforming businesses and take charges totaling $1.95 billion. "We are determined to return our financial results to an acceptable level as soon as possible," said Motorola President and Chief Operating Officer Robert Growney. Pressured by deteriorating demand and declining global pricing in its Semiconductor Products segment, driven in part by economic conditions in Asia, Motorola has disappointed investors for several quarters. Motorola's stock, which closed at $51.50 Thursday, has fallen from a high of $90.50 in July 1997. When Motorola reported 1998 first-quarter earnings significantly lower than last year, management surprised investors with warnings that effects of weak Asian economies would hurt upcoming quarters more than previously thought. The warning flag proved appropriate as Motorola also said late Thursday that it might report a second-quarter operating loss as the conditions have continued. Motorola's semiconductor business, which had been coming out of an industrywide cyclical downturn, was hit hard by the Asian economic crisis. Motorola has needed a very significant restructuring, and "it looks like we are finally going to get that move," said Hambrecht & Quist analyst Eric Zimits. "When viewed in context of the charge they are taking, it looks like they are making some pretty dramatic moves here," he added. Eraiba noted she had seen some signs that the company was working smarter in how it develops its products by looking to alliances such its recently announced pact with Lucent Technologies <LU.N>. "We're going to see this more and more. They don't have to develop everything," she said. And this is consistent with the company's announced plan to exit nonstrategic, underperforming businesses. "This is a step in the right direction," she said. Analysts will be looking for details of the plan from a conference call with management scheduled for Friday morning. "Clearly the global semiconductor industry has been substantially deteriorating rapidly as the year has progressed, so it is not a surprise that there was another shoe to drop. Beyond that without seeing more detail, I can't add too much else," said analyst Robert Wilke at Brown Brothers Harriman. ((--Chicago Equities News at 312 408 8787, chicago.equities.newsroom@reuters.com)) -------------------- TAL News Server History: ADD TAKE : 98/06/04 21:06