Motorola lowers sales, earning expectations

There seems to be several issues that caused Motorola to reevaluate its fourth-quarter sales and earnings forecasts. Besides being affected by the slowdown in the semiconductor industry and receiving less money from its cell-phone business, the company may not have been direct enough in its approach to wireless.

Three days before Motorola made its announcement, rival Nokia announced that its sales would rise 25% to 35% per year through 2003. The two company’s different outlooks left investors wondering why Motorola has been unable to tap into the wireless market as well as Nokia. Therefore, in typical fashion the market reacted to Motorola’s announcement by slapping its stock price down and causing other wireless companies to feel the effect as well.

“There were a number of Motorola-specific concerns that caused this, but maybe wireless did not change as quickly as they had expected,” said Andy Fuertes, a senior analyst with Allied Business Intelligence.

It is clear that Nokia has progressed differently because it addressed the market and timed it well, while Motorola and Ericsson focused less on the lower-end voice phones and more on next generation products, Fuertes continued.

“Nokia focused efficiently on wireless and had a solid business plan. Also they had a product line that reflected this,” he said. “Motorola decided to focus on margins instead of market share.”

Motorola reportedly expects fourth-quarter earnings of 15 cents a share on sales of $10 billion, which is about 27 cents a share less on sales of $10.5 billion. This was what Motorola had been expecting as of October.