Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Mudcat who wrote (21860)	6/4/1998 7:41:00 PM
From: tonyt	Respond to of 32384

Market News: June 4, 1998 Motorola Plans a Massive Charge Of $1.95 Billion, Slashes 15,000 Jobs An INTERACTIVE JOURNAL News Roundup Motorola Inc. announced charges totaling $1.95 billion and said it would cut 10% of its global work force, slashing 15,000 jobs, as it attempts to right a formerly profitable ship that has been cruising dangerously close to the rocks of late. The Schaumburg, Ill., maker of computer hardware and consumer electronics said it would take pretax charges totaling $1.95 billion and would report an operating loss for the period. The company also said the job cuts will take place over the next 12 months. The Schaumburg, Ill., company said slowing demand for semiconductors and pricing pressures -- the principal reasons behind the restructuring -- were driven mainly by Asian economic conditions. It said second-quarter earnings, excluding special items, will most likely be "well below" market expectations and may even show a loss. The company said that as a result of the problems, its net income would be well below the estimates of Wall Street analysts, and the company will likely post an operating loss for the second quarter. In the second quarter ended June 28, 1997, Motorola earned $268 million, or 44 cents a share, including a $170 million, or 18-cents-a-share charge. A First Call survey -- prior to Thursday's announcement -- of 27 analysts predicted the company would earn 20 cents a share in the second quarter. The company said that as part of the restructuring effort, it plans to consolidate its manufacturing operations, exit poorly performing businesses, and to write down impaired assets. In a statement released after regular stock-market trading ended, Motorola noted that it previously had expected to see higher sales growth and improved profits in 1998, but added that market conditions have prevented that from occurring. "It is clearly time to accelerate the implementation of our renewal plan," the company said. "We are determined to return our financial results to an acceptable level as soon as possible. The goal is to generate annualized savings, once all actions have been implemented, of more than $750 million." "While we very much regret the impact this will have on certain of our employees, we must adjust our production capacity to the reality of current business conditions and reduce costs to improve overall financial performance," said Christopher B. Galvin, the company's chief executive officer. Just last week, Standard & Poor's lowered its debt ratings on telecommunications and semiconductor company Motorola -- citing intense competition and weak demand in several market segments. S&P said, "Over the last few years, Motorola's sales growth has been affected by some product line shortfalls, compounded by heightening competition, and by concurrent weakness in several of its target market segments and geographies. Earnings have further been pressured by high levels of product-development expense, reserves for develop mental-stage programs and by a number of moderate-sized restructuring charges." In New York Stock Exchange composite trading Thursday, shares of Motorola rose 68.75 cents to $51.50. The announcement was made after the close of trading. Motorola recorded one of the highest average growth rates in sales and earnings among major U.S. multinationals until 1995. But Motorola stumbled badly when it failed to anticipate the industry's switch to digital cell phones from its long-dominant analog devices and then overestimated its capability to get digital equipment to market. Mr. Galvin lately has been fuming over the condition of the company founded by his grandfather and led by his father in its glory days. In a frank memo sent to his executive staff earlier this year, Mr. Galvin declared that Motorola had become "arrogant and dogmatic" and "slower than we should have been in adapting to new events." Some of Motorola's problems stem from external events it can't control, such as the collapse of consumer demand for its products in Japan and Southeast Asia and the retrenchment of overextended U.S. paging companies. Motorola still has the resources to stage a major comeback, including enormous expertise with the sort of microprocessors that are being added to VCRs, microwave ovens and other products to create what could become a new generation of consumer devices. The company recently beat out Intel Corp. and other major chip makers to win a series of lucrative contracts from General Instrument Corp. to supply the digital brains for the cable giant's next generation of set-top boxes. These boxes are expected to launch the era of interactive television. It may also reap the benefits of a daring decision made in 1988 to begin the $4 billion Iridium LLC project. Motorola spun off Iridium in 1991, retaining what is now a 20% interest and its role as general contractor. Iridium, which plans to offer a global cellular-phone service and connections among land-based cellular systems, has most of its satellites up. If it can successfully handle millions of calls after its commercial launch this September, Motorola could become a big manufacturer of satellite systems.