Motorola Sees Q3 Sales Decrease 16%

Schaumburg, Ill. — Slower growth in its global cellphone business and a suddenly weaker economy double-teamed Motorola during the third quarter, tying up any immediate expectations for a turn-around at the wireless technology giant.

Third-quarter sales in the company's largest segment, Personal Communications, which consists primarily of cellphones, were off 16 percent, dipping to $2.7 billion, compared with $3.2 billion in the third quarter of 2000.

However, market share for wireless handsets climbed by about two percentage points during the third quarter, compared with a year ago, reaching between 17 percent and 18 percent, the company said.

The cellphone segment returned to profitability in the third quarter, following two quarters of losses, a quarter ahead of schedule. It recorded pro forma operating earnings of $19 million during the three months, compared with $189 million in the year-ago period. Orders, however, were down 12 percent, to $3 billion.

The company, which warned of a fourth-straight quarterly loss upcoming in December, said it plans to cut another 7,000 jobs. This comes on the heels of 32,000 jobs eliminated since last December.

Motorola also lowered its outlook for global industrywide mobile phone shipments in 2001 to a range of 380 million to 400 million units, from the 400 million to 425 million units it expected earlier this year. In 2002, the company said it expects shipments of 420 million to 460 million units.

Overall Motorola sales dropped 22 percent during the three months ending Sept. 29, down to $7.4 billion, from the $9.5 billion reported in the year-ago period.

For the nine months, sales in Motorola's cellphone segment slid 24 percent, down to $7.5 billion, from $9.8 billion in the same period in 2000.

The segment's operating loss reached $1.9 billion, compared with a $47 million gain in the same nine months last year. On a pro forma basis, the nine-month operating loss was $620 million, compared with a $378 million gain in the same period in 2000.

Overall Motorola sales dipped about 17 percent during the nine months, hitting $22.7 billion, down from 27.5 billion in the year-ago period.