Motorola's upbeat third quarter meets expectations

Motorola matched Wall Street expectations today, posting third quarter earnings of $US332 million, or 53 cents per share, up from earnings of $40 million, or 7 cents per share for the same quarter last year.

The electronics company reported sales of $7.7 billion in the quarter ending October 2, up from $7.2 billion in sales in the same period the year before. The results excluded special items resulting in a net charge of $344 million or 39 cents per share after tax.

Strong sales in the quarter of digital wireless phones and the restructuring of the semiconductor and digital communications business during the past year accounted for the improved results, said Robert Growney, Motorola's president.

Motorola sales in the personal communications segment were $3.1 billion, up 37 per cent from the same period last year. Semiconductor products sales were $1.6 billion, up 11 per cent from the same period last year. Government, commercial and industrial segment sales were $1 billion, up 5 per cent from the same quarter last year.

In contrast, network systems sales declined to $1.6, down 17 per cent from the year ago quarter.

One analyst said Motorola's overall quarter was positive, due in large part to the performance of the personal communications division, which posted $140 million in operating profits.

"The personal communications group came through for them," said Pete Peterson, an analyst with San Francisco investment bank Volpe, Brown, Whelan & Co. "Particularly strong was digital handsets, which accounted for 89 per cent of all wireless phone sales for them."

In addition, Motorola's restructuring of its semiconductor division during the past two years has paid off, said Allen Leibovitch, an analyst with IDC. "They've segmented the semiconductor business by markets and done a good job of leveraging their new technology across those markets."

Much of the lacklustre performance in network systems was due to Motorola's investment in Iridium LLC, a satellite communications company that recently filed for bankruptcy protection. Motorola recorded a special charge of $944 million in the quarter and may take additional charges in the fourth quarter, company officials said.

In September, Motorola announced an agreement to purchase General Instrument Corp in an all-stock arrangement worth about $11 billion. The deal was not reflected in the report, but analysts said Motorola will be able to leverage General Instrument's set-top box technology as it expands its integrated communications systems.

"General Instrument has synchronisation with Motorola's cable modem business," IDC's Leibovitch said.

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