Motorola posts grim outlook

As the economy continues its assault on the telecom market, Schaumburg, Il.-based Motorola announced that it expects to lose money for the fourth straight quarter today.

The company also plans on terminating an additional 7000 jobs, bringing the total to 39,000 job cuts by the end of the year, when Motorola will have 108,000 people on staff. Selling business units will account for 4000 job cuts, with the rest coming from smaller cuts and attrition, according to the company.

Motorola expects to lose 4 cents to 5 cents per share for the fourth quarter, said President and Chief Operating Officer Robert Growney during a conference call. Growney attributed Motorola’s guidance to “uncertainties in the world’s economic outlook as a result of both the terrorist attacks of Sept. 11 and the resulting retaliation by the United States and its allies.”

Motorola announced that it lost $1.4 billion, or 64 cents per share, in the third quarter. Including one-time charges, operating losses totaled $153 million, or 7 cents per share. A year ago, Motorola made $643 million, or 28 cents per share, during the third quarter.

Motorola attempted to keep a positive spin on its third-quarter results, announcing a reduction in pro forma loss compared to the second quarter and a profit in its wireless handset business, which continues to gain market share. The company also reduced net debt by $2.4 billion from the second quarter and reported a positive operating cash flow.

Motorola does not see a recovery in the global semiconductor industry until the first half of 2002, but its handset business should post a profit for the fourth quarter, which reported $2.7 billion in sales and a $19 million operating profit for the third quarter. Motorola also expects its global industry chip sales to drop by 25% to 30% for the year, only increasing in 2002 by 5% to 10%.

Financial analysts at UBS Warburg said Motorola stock “could move higher during the next six months if Motorola can continue to show improvement in the wireless phone business and quicken the recovery in its semiconductor business.”

In late afternoon trading, Motorola shares were trading at $16.80 per share, a slight increase for the day after closing at $16.72 yesterday.