Motorola’s large Q2 net loss offset by unexpected profit

Motorola may have posted its largest net loss ever due to a sizable restructuring charge, but the company beat analysts’ expectations when it reported a second-quarter profit of $48 million.

Motorola’s net loss in the second quarter was $2.3 billion, or $1.02 a share, compared with a net loss last year of $759 million, or 35 cents a share. This included a previously disclosed $2.4 billion restructuring charge.

Motorola during a conference call with analysts was adamant that its net loss was due largely to restructuring activities. Analysts seemed less phased by the size of the company’s net loss than by Motorola’s unexpected $48 million in profit, or 2 cents a share. This compared with a loss of $238 million, or 11 cents a share, a year ago.

Analysts had not expected the company to report a profit before charges in the third quarter this year.

During the company’s earnings call, CEO Christopher Galvin discussed the company’s restructuring activities and maintained that Motorola is committed to investing in the future of the company and the industry.

“We didn’t shy away from the necessary kinds of changes that needed to be made, though we did take a large charge for cost reduction actions,” Galvin said. “Despite all of the necessary restructuring we had to do, we have maintained a significant investment in research and development.”

Motorola’s sales from ongoing operations did fall 11% to $6.7 billion from $7.5 billion last year. However, this beat its original sales forecast of $6.4 billion. The company anticipates annual sales in 2003 could reach $29 billion, said Edward Breen, Motorola president and chief operating officer.