Motorola Q3 Phone Segment Sales Rise 4%
By Jeff Malester -- TWICE, 10/12/2000
Schaumburg, Ill. -- Motorola announced that sales in its personal communications segment, primarily cell phone sales, had climbed 4 percent to $3.22 billion in the third quarter, compared to $3.08 billion in the third quarter of 1999.
At the same time, the company warned that lower-than-anticipated worldwide demand for wireless telephones could have a negative impact on its financial performance in 2000 and 2001.
Motorola reduced its estimate for the number of cell phones it would sell, down to 410 million to 425 million from 425 million to 450 million. It attributed the lower numbers partly to high saturation of mobile phones in Europe and Asia
Orders in the personal communications segment for the third quarter were $3.3 billion, down 23 percent from the same three months in 1999 when orders were extremely strong due to concern over tight supplies of wireless phones and components. Orders were lower in the Americas for the third quarter, but were up significantly for the nine months ended Sept. 30, when total company orders for the personal communications segment were down by only 5 percent.
With supply problems no longer a factor in the third quarter ended Sept. 30, wireless orders were fewer than usual, while backed-up orders in the pipelines were being emptied. Motorola expects its order growth to return to a more normal relationship to sales growth in the fourth quarter.
Motorola reported that sales of telephones increased significantly in the Americas during the third quarter.
Operating profits in the personal communications segment during the third quarter increased to $185 million, about 32 percent above the $140 million recorded in the same three months in 1999. In an indication that Motorola's phones are become more profitable, the company said operating profit margin for the segment was 6 percent of sales in the third quarter, compared to 5 percent of sales in the same period last year, and 4 percent of sales in the second quarter of this year.
Overall in the segment, Motorola said digital products represented 98 percent of wireless telephone sales dollars, and unit sales were up significantly in all digital technologies. Analog product sales were significantly lower. Orders for messaging subscriber products were down significantly in both the third quarter and nine months.
Overall sales for ongoing operations at Motorola during the third quarter climbed 18 percent, reaching $9.5 billion, compared to $8.1 billion in the third quarter of 1999.
Excluding special items, net earnings soared 66 percent to $598 million, compared to $361 million in the year-ago quarter. Including sales from businesses sold after the second quarter of 1999, sales increased 15 percent from the $8.2 billion a year ago.
"Motorola continued to make solid progress in improving its financial performance," said Robert L. Growney, president/COO, who singled out significant contributions in segment sales and operating profits from Broadband Communications, Semiconductor Products and Global Telecom Solutions.
In the first nine months, sales from ongoing operations rose 20 percent to $27.5 billion, compared to $23 billion in the same nine months in 1999. Nine-month earnings from ongoing operations, excluding special items, were $1.6 billion, compared to $814 million in the year-earlier period.
Including sales from businesses sold during the first nine months of 1999, sales increased 15 percent, from $24 billion a year ago. Including the earnings from businesses sold after the second quarter in 1999, nine-month earnings climbed 74 percent, from $900 million a year ago.
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