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Motorola Q4 Cellphone Segment Sales Dip 3%

Schaumburg, Ill. – Introduction delays for new cellphones with popular features such as color screens and digital cameras resulted in a 3 percent fourth-quarter drop in sales for the personal communications segment at Motorola.

The cellphone segment, by far Motorola’s largest, hit sales of $3.3 billion in the fourth quarter, down from $3.4 billion in the year-ago period. However, sales climbed 12 percent over the third quarter and orders increased 64 percent, to $3.6 billion.

Motorola’s personal communications segment recorded operating earnings of $127 million in the fourth quarter, ended Dec. 31, down from $294 million in the same three months a year earlier. The company said the decline was primarily due to the decrease in sales and a decline in gross margin.

Excluding special items, fourth quarter operating earnings reached $179 million, compared with $301 million year-on-year.

For the 12 months, sales in Motorola’s cellphone segment dropped 2 percent, to $11 billion, down from $11.2 billion in 2002.

Operating earnings for the year in the segment came in at $479 million, down from $503 million in the previous 12 months. Excluding special items, 12-month operating earnings hit $530 million, compared with $804 million year-over-year.

Despite disappointing results in its cellphone business, Motorola managed a 4 percent increase in consolidated sales for the fourth quarter, hitting $8 billion, up from $7.7 billion in the same three months last year. Excluding special items, fourth quarter consolidated net earnings reached $409 million, up from $291 million in the same period in 2002.

Full-year consolidated sales reached $27.1 billion, down from $27.3 billion year-on-year. Net earnings for the period climbed to $581 million, excluding special items, compared with $279 million in 2002. Including special items, 12-month net earnings hit $893 million, compared with a net loss of $2.5 billion the previous year.

Motorola is anticipating sales of $6.4 billion to $6.8 billion in the first quarter.