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Motorola hits lowered target
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October 9, 2001: 6:49 p.m. ET
Mobile-phone and chipmaker loses 7 cents per share, excluding items.
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NEW YORK (CNNmoney) - Motorola Inc. on Tuesday reported a third-quarter loss that was in line with lowered expectations on sales that fell 22 percent from the same period a year ago.
After the close of trading, Motorola said it lost 7 cents per share, during the third quarter. That excludes restructuring charges and other one-time items and compares with a profit of 26 cents per share during the same period last year.
Analysts generally had been expecting Motorola (MOT: down $0.67 to $16.72, Research, Estimates) to log a loss of 7 cents per share. Most lowered their estimates after Motorola warned of a shortfall in early September.
Including charges, Motorola's net loss for the quarter was $1.4 billion, or 64 cents per share, compared with a net profit of $531 million, or 23 cents per share, during the same quarter last year.
At $7.4 billion, Motorola's third-quarter sales fell 22 percent from $9.5 billion a year ago and were slightly below the $7.5 billion the sales it reported during the second quarter.
On Sept. 6, Motorola said it expected to post a third-quarter loss, excluding restructuring charges and other one-time items, ranging between 5 cents and 8 cents per share. It said that it expected sales to be about even with the $7.5 billion recorded during the second quarter. Prior to that warning, Motorola executives had been expecting a more modest loss and a sales increase of roughly 5 percent.
The company's latest results marked the third consecutive quarterly loss for Motorola, whose business has been hit hard by a global telecommunications slowdown.
While best known for mobile phones and pagers, which account for the bulk of sales, Motorola also is a leading supplier of semiconductors used to make wireless communications devices. About 25 percent of the company's sales are derived from its semiconductor unit.
Faced with a substantial slowdown in all its end markets, the company this year has implemented a broad restructuring program under which it has: laid off more than 32,000 employees; consolidated its 30 separate units that made communications products into one large division; enlisted new executives to head up its core operating units; and sharpened its focus on the market for wireline broadband communications equipment.
In its earnings release Tuesday, the Schaumburg, Ill.-based company said its wireless handset business had returned to profitability and had made progress toward reducing its operating loss.
The company also said it paid down $2.4 billion in debt during the quarter and generated positive cash flow of roughly $200 million in the third quarter.
"We will continue to be focused on efforts to control operating expenses and to maintain the health of our balance sheet during this period of uncertainty," Robert L. Growney, Motorola's president and chief operating officer, said in a statement.
The company did not provide its financial expectations for the current quarter. Executives are expected to do so during a teleconference before the U.S. markets open on Wednesday.
By First Call's count, analysts currently anticipate a fourth-quarter profit of a penny per share on $8.3 billion in sales.
At $2.7 billion, Motorola's personal communications segment, which includes mobile phones and pagers, logged a 16 percent decline in sales during the third quarter. Orders for that business segment were $3 billion, down 12 percent. The business segment recorded operating earnings of $19 million, a 90 percent decline from versus $189 million a year ago.
Third-quarter semiconductor sales fell 48 percent to $1.1 billion, while orders fell 49 percent to $1.1 billion, Motorola said. The company's semiconductor business logged an operating loss of $355 million, compared with operating earnings of $202 million a year ago. 
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