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Motorola clarifies warning
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March 6, 1998: 12:21 p.m. ET
Stock loses $1.4 billion in market cap as Motorola sees 25 percent shortfall
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NEW YORK (CNNfn) - Motorola Inc. saw about $1.4 billion shaved off its market capitalization Friday as the electronics giant clarified its profit warning, projecting first-quarter earnings will be at least 25 percent lower than Wall Street had expected.
Shares of the Schaumburg, Ill.-based company (MOT) fell 2-9/16, or 4 percent, to 53-5/16 in early trading. The stock was among the most actively traded issues on the New York Stock Exchange.
Prior to Thursday evening's announcement, analysts had a consensus estimate of 47 cents a share for the current quarter, ending March 31, compared with 53 cents in the year-earlier period. But analysts were guided lower by company officials during a conference call Friday morning.
Bear Stearns' Alex Cena cut his first-quarter earnings projection to 35 cents a share from 49 cents. Marc Cabi of Deutsche Morgan Grenfell shaved his projections to a range of 28 to 30 cents from 48 cents. A number of analysts also cut estimates for the next two fiscal years.
The maker of semiconductors and wireless communications issued its gloomy forecast Thursday in part because of the continued economic turmoil in Asia. The disappointing news came a day after the world's largest chipmaker, Intel Corp., shocked investors with a similar announcement.
Motorola further said it expects to cut its forecast for fiscal year 1998 semiconductor growth to the mid-single digits, though company officials declined to be more specific during a conference call with analysts. Semiconductor products sales had risen 10 percent in the fourth quarter of 1997 compared with a year ago.
In January, the company forecast sales growth in the 10 percent range for the first and second quarters. Motorola now says that forecast also is no longer realistic for the second quarter.
While Motorola said it is taking cost and capital spending control measures, officials said Friday they don't expect to take an unusual charge in the first quarter because of the cuts.
-- from staff and wire reports
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Motorola
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