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Motorola 4Q falls short
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January 12, 1998: 7:02 p.m. ET
Chief says effects of turmoil to last through first half of 1998
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NEW YORK (CNNfn) - Motorola Inc. Monday reported weaker-than-expected fourth quarter profits and warned that Asian's economic crisis would continue to affect results for at least another six months.
The semiconductor and communications equipment company earned $321 million, or 53 cents a share, in the three months ended in December, compared to profits of $238 million, or 39 cents a share a year ago. Sales rose 8 percent to $8.3 billion from $7.7 billion.
The latest fourth-quarter results included special charges of $110 million, or 12 cents a share, related to discontinuing several unprofitable business lines.
Excluding the charges, Motorola earned $393 million, or 65 cents a share, still below First Call expectations of 68 cents a share. In the same period of 1996, Motorola earned $357, or 59 cents a share. Motorola's results are closely watched as an early indicator of the technology sector.
For the year, Motorola earned $1.18 billion, or $1.94 a share, compared to $1.15 billion, or $1.90 a share in 1996.
The results were announced after Monday's closing bell. Motorola (MOT) shares closed off 1 to 54-1/2. Shares were unchanged after hours.
Robert Growney, Motorola's president and chief operating officer, said the results were pressured by efforts to discontinue several unprofitable programs -- a process which he said was now complete -- and Asia's woes.
"During the fourth quarter, the deterioration of economic conditions in certain Asian markets had an impact in terms of slowing the growth of sales, orders and profits, as well as putting pressure on pricing," Growney, said in a statement.
Christopher Galvin, Motorola's chief executive officer, warned that while the company instituted many changes in 1997 designed for long-term, Asia's economic problems could continue to drag down results through mid-1998.
"We are still facing challenges in the near term, as we expect the economic conditions in certain markets in Asia that affected fourth-quarter results to continue [through] at least the first half of 1998.
"We are assuming the cooperative efforts of many nations and the International Monetary Fund will help stabilize the Asian situation. We will continue to control costs, but we will also continue our investments in Asia where appropriate...," he said.
Galvin said Motorola's manufacturing presence in the region should help minimize the economic impact and alleviate pricing pressures.
"Despite the current conditions in Asia, the region continues to represent a solid long-term growth opportunity for Motorola. We remain confident that Motorola is building the foundation for profitable growth in the years to come," he said.
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Motorola
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