Motorola Inc. reported a 25 percent drop in revenue for its fourth quarter to US$7.3 billion, down from $10.1 billion a year earlier, blaming a slowdown in customer spending in the telecommunication market. But in a conference call with analysts on Wednesday, the company predicted it would return to profitability by the end of 2002.
For the quarter ended Dec. 31, 2001, Motorola reported a net loss of $90 million, or $0.04 per share, excluding special items and exited businesses. This compared to a net profit of $362 million or $0.16 per share during the year earlier quarter, the company said in a statement. With special items included, Motorola's fourth-quarter net loss was $1.2 billion, or $0.55 per share.
A consensus of analysts polled by Thomson Financial/First Call expected Motorola to report a loss excluding special items of $0.05 per share. At the end of its prior quarter, the company said it expected to post a loss of between $0.04 and $0.05 per share, a figure it reiterated earlier this month. For the entire year, revenue from ongoing operations, excluding special items and exited businesses, totalled $29.5 billion, compared to $36.8 billion in 2000. The net loss for 2001, excluding the special items, was $697 million, compared to a net profit of $2.0 billion in 2000.
Including results from exited businesses and special items, the company reported 2001 sales of $30.0 billion, compared to sales of $37.6 billion for 2000. The net loss for 2001, including the special items, totalled $3.9 billion, compared to a net profit of $1.3 billion in 2000.
Last year produced the worst annual decline in the history of the semiconductor industry, said Ed Breen, Motorola's president and chief operating officer, in a phone conference with analysts Wednesday morning. Indications point to a rebound this year, he said.
"The bottom of the downturn occurred in the third quarter," he said. "There are growing signs of an overall economic recovery."
Motorola expects sales in most of its divisions to be lower for the first quarter compared to the first quarter of last year and from 5 percent to 10 percent lower for all of 2002, estimating sales for the year at $6 billion to $6.1 billion. However, job cuts and restructuring will lower, by 20 percent, the revenue Motorola needs to break even this year, Breen said.
With sales margins improving, the company expects to post a net profit for the year despite lower sales, Breen said. Motorola predicts a profit of $0.04 a share for 2002, and if all sales and margin projections come in at the high end of estimates -- and the economy recovers mid-year as expected -- then profits could be as high as $0.15 a share, he said.
Still, Motorola expects a net loss of $0.11 to $0.14 a share for the first quarter of 2002. A return to profitability isn't projected until the third quarter.
Motorola's largest division, its personal communications segment, which includes its handset business, saw revenue drop in the fourth quarter of 2001 to $3 billion, down 14 percent from the year earlier quarter. The company also saw its global telecommunication division suffer a 33 percent drop in revenue, down to $1.4 billion, thanks to falling demand worldwide for wireless infrastructure equipment combined with lower average selling prices, Motorola said.
Motorola also took a hit in its broadband communications division, with revenue dropping to $580 million, a 54 percent decline year-on-year. In that market, it blamed a slowdown in capital investments and subscriber equipment roll-out by cable operators.
The company did not announce any new layoffs on top of those already handed down over the past few months. Motorola, which had 150,000 employees in August 2000, will have eliminated 42,900 jobs and transferred 5,500 employees by the end of 2002, the company said in December.