Motorola adds Q1 results to string of losses

Motorola Inc. on Tuesday reported its fifth consecutive quarterly loss and a 20 percent drop in sales for the first quarter of 2002 compared to a year earlier. However, the company once again pledged to return to profitability in the second half of this year.

Revenue for the quarter ended March 30 came in at roughly US$6 billion. For continuing operations, excluding businesses Motorola has exited, the figure was down 20 percent from revenue of $7.5 billion in the first quarter of 2001.

Excluding special charges, such as costs associated with layoffs, Motorola reported a net loss of $174 million, or $0.08 per share. That compares with a net loss of $211 million, or $0.10 per share, in the same quarter last year.

A consensus of analysts' estimates had pegged Motorola, in Schaumburg, Illinois, to report a loss of $0.12 per share on revenue of $6.05 billion, according to a survey by Thomson Financial/First Call.

Based on GAAP (Generally Accepted Accounting Principles), revenue for the quarter fell 22 percent compared to GAAP revenue the same quarter last year. Motorola's net loss as reported under GAAP, and including special charges, was $449 million, or $0.20 per share, compared with a net loss of $533 million, or $0.24 per share, for the first quarter of 2001. Special charges during the quarter totaled $388 million before accounting for tax.

Following a number of organizational changes detailed in February by Motorola executives, the company now focuses on five core businesses: mobile handsets, semiconductors, service-provider infrastructure, broadband equipment and commercial and public-safety networks.

Sales from Motorola's personal communications division, which includes the company's mobile handsets, were $2.3 billion, up 1 percent from the first quarter of 2001. It was the only division to show year-over-year growth. During the quarter the company released six new handsets and upgraded three existing models, Motorola said.

Sales from its semiconductor division fell 26 percent from the year-earlier quarter to $1.1 billion. Much of that decline was due to what the company and analysts consider to be the semiconductor industry's sharpest decline in history. To counteract that decline, the company has begun outsourcing its manufacturing. It announced last week that it has formed a five-year alliance with Koninklijke Philips Electronics NV and STMicroelectronics NV to jointly develop future chip technologies.

Sales from its Global Telecom Solutions division, which deals in service provider infrastructure, were $1.1 billion, down 36 percent from the first quarter last year. Projects completed during the quarter that used Motorola equipment included the launch of a 3G (third-generation) mobile network in Japan, and a CDMA (Code-Division Multiple Access) network set up by China Unicom Ltd. The company also signed GSM (Global System for Mobile Communications) infrastructure deals totaling more than $400 million in Thailand and Indonesia.

The company's Commercial, Government and Industrial Solutions division accounted for $799 million in revenue, down 10 percent compared to the same quarter last year. Its Broadband division brought in sales totaling $525 million, down 36 percent compared to the same quarter last year. Finally, sales from its Integrated Electronic Systems division were $509 million, down 20 percent compared to the first quarter of 2001.

Ahead of Tuesday's earnings announcement, Motorola's (MOT) stock closed at $15, up $1.34, or 9.81 percent, on the New York Stock Exchange.

Motorola executives are scheduled to hold a conference call with analysts on Wednesday at 8 a.m. EDT to discuss the results. That call will also be Webcast. A link to the Webcast can be found on Motorola's investor Web site at http://www.motorola.com/investor.

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Matt Berger

Computerworld
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