Motorola reports loss, sees profits in 2002

Ed Breen

Wireless technology giant Motorola, posted its fourth consecutive quarterly loss as expected, reflecting a slowdown in customer spending, but projected a profitable year despite two more quarters of losses. The fourth-quarter loss meant Motorola, which is in the process of slashing almost a third of its work force, posted its first operating loss in 71 years, along with a net loss of $1.2 billion.

Motorola, based in the Chicago suburb of Schaumburg, Illinois, predicted losses in the first two quarters of 2002, with profits in the second half of the year and a profit for the full year. The company has been struggling to turn a profit amid a punishing downturn in the telecom sector. “While we expect to incur losses in the first and second quarters of 2002, we expect to return to profitability in the second half of the year and be profitable for the full year, barring any unforeseen political or economic disruptions,” president and chief operating officer Ed Breen said.

“We continue to view this as an end of 2002 to 2003 story for value players with patience and a long-term horizon,” said Justin McNichols, portfolio manager with Osborne Partners Capital Management, which does not own Motorola shares.

The company said last month its 2002 profits would be in line with analysts’ estimates, which were then 15 cents a share. Since then, Wall Street’s doubts have led to a drop in the consensus to a profit of 4 cents a share, with estimates ranging from a loss of 22 cents to a profit of 15 cents, according to Thomson Financial/First Call.

Analysts expect Motorola to post losses of 12 cents a share and 4 cents a share in the first two quarters, respectively, according to First Call.

Along with Finland’s Nokia and Sweden’s Ericsson, Motorola, the world’s No 2 mobile phone maker has been hit by a slowdown in demand for cell phones and wireless infrastructure, compounded by management missteps.

Reuters