Motorola Inc. Thursday said it would not meet its earnings mark for the fourth quarter of 2000 because of less-than-expected profits in its semiconductor and personal communication businesses. Motorola shares were down 4.21 percent, or 75 cents, to US$17.06 in afternoon trading. Trading volume exceeded 37 million shares.
Inventory adjustments by customers are causing a slowdown in market conditions in the worldwide semiconductor business, the company said in a statement. Motorola sells semiconductors for networking, wireless products, the automotive industry and computers. The company experienced a slowdown in sales in chips for standard products and in the transportation and networking business segments, said George Grimsrud, a Motorola spokesman. The company's communications segment, meanwhile, is being hampered by delays in achieving expected cost reductions in wireless phone production.
Sales for the fourth quarter are now supposed to hit US$10 billion and earnings per share are now expected to hit 15 cents a share. Initial guidance in October from Motorola indicated the company was to make $10.5 billion in sales and earnings of 27 cents per share.
Partially as a result of this guidance, analysts had expected the Schaumburg, Illinois, telecommunications hardware and chip company to earn 27 cents per share, according to First Call/Thomson Financial.
In addition, Motorola said its guidance for 2001 will be revised. It initially gave guidance in October that the company would see US$44 billion in sales and earnings per share of $1.20. The company Thursday did not disclose guidance other than to say it would be lower than initially expected.
Motorola began implementing cost reduction actions during the third quarter of 2000, which are continuing during the fourth quarter and into 2001, the company said. This will include consolidation of its manufacturing operations and outsourcing of manufacturing.
Growth is expected in the global wireless telephone market, with unit sales in the range of 525 million to 575 million in 2001. This is up from 420 million units in 2000. Cost reductions in its product portfolio of wireless telephones and inventory adjustments by semiconductor customers should be completed by mid-2001, the company said.http://www.mot.com/