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Motorola Posts Profit On Phone Sales

7/17/2002 01:01:00 PM Eastern

Schaumburg, Ill. - Driven, in part, by higher market share of cellular handsets, sales in the Personal Communications segment at cell phone manufacturer Motorola increased 5 percent in the second quarter, climbing to $2.6 billion, compared with $2.5 billion in the year-ago period.

Motorola's Personal Communications segment reported $3 million in operating income, up from an operating loss of $593 million in the same quarter in 2001. Excluding special items, the segment reported operating earnings of $172 million in the second three months, ended June 29, compared with an operating loss of $195 million in the same quarter last year.

However, orders were down 11 percent in the second three months, compared with a year ago, because the company is proactively working with wireless service providers, distributors and suppliers to reduce historical levels of backlog.

Motorola claimed a 1-percentage-point gain in market share for its cellular business during the second quarter, to 18 percent, with sales up in North America during the period, compared to the second quarter in the previous year. Unit shipments for the second quarter rose 1 percent, compared with a year ago, and 17 percent, compared with the first quarter.

Sales in the Personal Communications segment are expected to increase sequentially in both the third and fourth quarters of 2002, said Motorola.

Sales for the six months in the Personal Communications segment increased 3 percent, to $4.9 billion, up from $4.8 billion in the previous period last year. The segment recorded an operating loss of $32 million for the six months, down from an operating loss of $1.5 billion in the same six months in 2001. Excluding special items, the segment reported operating income of $279 million in the six months, compared with an operating loss of $577 million year over year.

Although Motorola overall reported its largest net loss in company history - $2.3 billion - when $3.4 billion in restructuring and other charges are plugged in, the communications giant actually posted a profit of $48 million, topping Wall Street expectations. This compares with an overall net loss of $759 million in the same quarter last year, or a $232 million loss, excluding special items.

Sales in the second quarter reached $6.7 billion, down 11 percent from the $7.5 billion recorded in the same three months in 2001.

For the six months, sales hit $12.8 billion, down from $15.2 billion in the previous period. The company reported a net loss of $2.8 billion in the six months, compared with $1.3 billion in the same period last year. Excluding special items, the net loss for the six months was $126 million, compared with $438 million year over year.

Looking ahead, Motorola expects sales in the third quarter of 2002 to be about $6.7 billion, rising to $7.5 billion in the fourth quarter. By comparison, sales in the third quarter of 2001 were $7.2 billion and $7.3 billion in the fourth quarter. Sales for the full year 2003 are anticipated at about $29 billion.

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