SCHAUMBURG, ILL. -Delays in achieving expected cost-reductions in wireless phone production and flat market conditions in the worldwide semiconductor industry have forced Motorola to report it doesn’t expect to achieve anticipated sales and net earnings for the fourth quarter.
Motorola’s sales for the fourth quarter, which runs through the end of December, are now expected to be $10 billion, down from the earlier figure of $10.5 billion. Expected earnings per share have been reduced from 27 cents to 15 cents for the fourth quarter.
Sales in first-quarter 2001 are expected to be $8.8 billion, with earnings per share at 12 cents. These estimates exclude special items.
Motorola said problems with wireless phone cost-reduction are adversely affecting operating profits at the company’s Personal Communications Segment. At the same time, market conditions in the worldwide semiconductor industry are slowing and adversely affecting Motorola’s Semiconductor Products Segment.
However, the company said it expects robust growth in the global wireless telephone market-with unit sales in the range of 525 million to 575 million in 2001, up from an estimated 420 million units this year-and expects to fully participate in this growth.
“Even though it is necessary to reduce our expectations for sales and earnings in the short term,” said president/chief operating officer Robert L. Growney, “we continue to believe that tremendous long-term opportunity exists at three levels of the value chain. These are embedded chips, embedded electronic systems and end-to-end integrated communications for wireless, broadband and Internet markets. This is the core of our strategic focus.”
Motorola began to implement new cost-reduction activities in the third quarter, which are being followed by additional actions in the fourth quarter and will continue into the first quarter next year. The company believes the beneficial impact of its cost-reductions in wireless telephones will become evident by midyear 2001.