Motorola Sees 2nd-Quarter Phone Sales Dive 25%

By Jeff Malester On Aug 6 2001 - 6:00am

Hit hard by difficulties in the telecommunications industry, wireless technology company Motorola reported an overall $759 million net loss and 19 percent decline in sales for the second quarter. Cellphone sales dropped 25 percent to $2.5 billion.

As part of its third restructuring in three years, Motorola took a $496 million charge against earnings in the second quarter ended June 30. Excluding the one-time items, the company lost $232 million, compared with a gain of $551 million in the year-ago three months. Sales in the quarter were $7.6 billion, compared with $9.3 billion in the second quarter of 2000.

Motorola, which is the No. 2 mobile phone maker behind Nokia, said its personal communications segment incurred an operating loss of $237 million in the second quarter, compared with operating earnings of $136 million in the second quarter of 2000. Orders were $2.9 billion, down 9 percent.

Placing the blame for the decline in its communications business on lower worldwide demand for wireless phones and average selling price declines resulting from substantial shipments of end-of-life products, Motorola said sales and orders for wireless phones in the Americas were down. Industry sales of handsets worldwide, once expected to approach 600 million in 2001, are now estimated at about 370 million.

For the six months, sales at Motorola slipped about 15 percent to $15.3 billion, down from $18 billion in the same period in 2000. The company lost $1.3 billion, compared with earnings of $652 million in the same six months last year. Including pro forma adjustments, Motorola lost $438 million in the six months, compared with a gain of $1 billion in the same six months the previous year.

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