Motorola Cellphone Unit's Q4 Sales Fall 14%

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Faced with an ongoing reduction in consumer spending, wireless technology heavyweight Motorola reported its fourth consecutive quarterly loss and its first full-year loss from ongoing operations in 70 years.

Sales in Motorola's Personal Communications segment — the company's largest unit, and the one that makes cellphones, pagers and other wireless products — dropped 14 percent in the fourth quarter ended Dec. 31, hitting nearly $3 billion, down from$3.5 billion in the year-ago three months. The cellphone segment reported a $189 million operating profit, excluding special items, compared with $83 million in the same quarter in 2000.

Orders in the cellphone segment were $2.2 billion, down 23 percent in the fourth quarter, while the company said the segment's estimated share of the global handset market remained at about 17 percent.

"While we expect to incur losses in the first and second quarters of 2002, we expect to return to profitability in the second half of the year and be profitable for the full year, barring any unforeseen political or economic disruptions," said Christopher B. Galvin, chairman/CEO.

In order to keep this promise and set the stage for revitalization in the coming months, Motorola continues a strategy that includes reducing costs and manufacturing capacity. Already, the company has reduced its workforce by about one third, or 48,000 employees, since the summer of 2000, and closed numerous manufacturing facilities.

Motorola reported sales from ongoing operations overall in the fourth quarter slid 25 percent, to $7.3 billion, down from $9.8 billion in the same quarter in 2000. Net loss was $1.2 billion, compared with a profit of $135 million in the year-ago period. Motorola had a $1.1 billion after-tax charge for special items in the three months. The company reported a $90 million operating loss in the fourth quarter, down from a profit of $362 million in the fourth quarter of 2000.

For the year, sales in Motorola's Personal Communications segment hit $10.4 billion, compared with $13.3 billion for 2000. The segment recorded an operating loss of $435 million for the year, excluding special items, down from an operating profit of $461 million, excluding special items, in the previous 12 months.

Overall company sales for the year were $30 billion, down from $37.6 billion the previous 12 months. The 2001 full-year net loss was $3.9 billion, compared with net earnings of $1.3 billion in 2000.

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