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Motorola Sees Slight Profit Next Quarter

By Reuters
Published | Updated

CHICAGO – Motorola Inc., the world's second-largest cell phone maker, said on Thursday it expects to post a third-quarter loss and a slight fourth-quarter profit, with sales seen increasing by about 5 percent quarter-over-quarter in both periods.

Late Wednesday, Motorola reported a second-quarter operating loss, excluding special items, due to weakness in the telecommunications and semiconductor industries.

Motorola said it expects the third-quarter loss to be ''several cents per share'' after pro-forma adjustments, with sales rising about 5 percent from second-quarter levels. Wall Street analysts had expected the company to break even in the third quarter, according to research firm Thomson Financial/First Call.

For the fourth quarter, the company expects to be ``slightly profitable'' after adjustments, with sales increasing about 5 percent over the third quarter. Wall Street had expected Motorola to post a fourth-quarter profit of 11 cents a share, according to First Call.

In a conference call with analysts, the Chicago-based firm also said it expects its cell phone unit to be profitable in the second half of 2001.

Motorola's cell phone unit, No. 2 behind Nokia Corp., has suffered from an industrywide slowdown in sales and declines in the average selling price of phones.

The company reported a 25 percent fall in second-quarter sales to $2.5 billion and a 9 percent decline in orders to $2.9 billion. The operating loss for the period was $237 million, compared with earnings of $136 million a year ago.

Motorola said it sees global industrywide handset sales of 400 million to 425 million units in 2001, flat with 2000.

Global semiconductor sales are expected to fall 15 percent to 20 percent in 2001. Sales are expected to grow by the same amount in 2002.

Motorola's semiconductor unit reported that sales declined by 38 percent to $1.3 billion in the second quarter. Orders dropped 51 percent to $1.0 billion, and the unit reported an operating loss of $381 million, compared with earnings of $176 million a year ago.

The company blamed the results on a substantial downturn in sales across the industry.