Motorola Posts Loss But Sees Profits

CHICAGO – Motorola Inc. (MOT) Tuesday posted its fifth consecutive quarterly loss, reflecting a slowdown in customer spending, and the No. 2 maker of wireless telephones repeated it expects to be profitable in the second half of the year.

"We continue to believe Motorola will return to profitability during the second half of 2002 and be profitable for the full year, excluding special items and barring any unforeseen political or economic disruptions," Motorola Chairman and Chief Executive Christopher Galvin said in a statement.

"We also believe the U.S. and global economies should firm in the second half of 2002 and further improve in 2003 given stable world affairs," he added.

Motorola, which also makes wireless telecom equipment, semiconductors and set-top boxes for cable television, reported a first-quarter loss of $174 million, or 8 cents a share, before items, compared with a loss of $211 million, or 10 cents, in the year-ago period.

Analysts, on average, expected a loss of 12 cents a share, according to Thomson Financial/First Call, with loss estimates ranging from 11 cents to 15 cents.

Along with Finland's Nokia and Sweden's Ericsson Motorola has suffered from a slowdown in demand for cell phones and wireless infrastructure equipment. Management missteps have compounded the problems at Motorola.

The weak economy has hurt its automotive electronics, semiconductor and broadband businesses.

Including $388 million pretax charge, or $275 million after taxes mostly for closing plants and writing down some investments, Motorola posted a first-quarter net loss of $449 million, or 20 cents a share, compared with a net loss of $533 million, or 24 cents, in the year-ago quarter. Net sales fell to $6.02 billion from $7.68 billion a year earlier.

The company, based near Chicago, said its Personal Communications, or wireless phone, business posted the third consecutive positive result. The unit earned $108 million before items, thanks to lower costs and expenses, compared with a loss of $382 million a year ago.

Segment sales rose 1 percent to $2.3 billion, but orders fell 11 percent.

The Global Telecom Solutions, or wireless infrastructure equipment, segment posted a loss before items of $49 million, compared with a profit of $42 million a year ago. Sales fell 36 percent to $1.1 billion, while orders declined 17 percent.

Motorola's semiconductor unit posted a loss before items of $226 million, wider than last year's loss of $95 million. Sales fell 26 percent to $1.1 billion, while orders rose 18 percent.

Before the results were announced, Motorola's stock closed up $1.34, or almost 10 percent, at $15 on the New York Stock Exchange Tuesday.

The shares have fallen 2 cents since the beginning of the year, while the Standard & Poor's Communications Equipment Index has declined almost 24 percent in the same period.

Nokia, the world's leading cell phone maker, will report results on April 18, with No. 3 Ericsson on April 22.

Nokia said last month it expected a decline in first-quarter earnings, with sales falling more than 10 percent, due to weakness in its networks unit. Ericsson, the world's largest maker of equipment for wireless networks, is expected to report a loss similar to a year ago on a 31 percent drop in sales.