Motorola Inc. last week released its third quarter financial results, which detailed the lower-than-expected performance of the company that was forecast in December. Earnings per share, previously expected to be 60 cents, instead totaled 44 cents per share, or $266 million.
The figure, while above the previous year’s third quarter total of $206 million, or 34 cents per share, were “at less robust levels than desired,” said the company. Earnings were down for the first nine months to $859 million, or $1.41 per share, from $916 million, or $1.51 per share, experienced last year. Much of this is blamed on the poor performance of the company’s Messaging, Information and Media Segment. Sales in that division dropped 13 percent to $885 million and orders dropped 44 percent. Operating profits also sagged.
The company pointed primarily to the weakening of its two largest markets for paging products: the United States and China. In China, the paging market experienced a buildup of pager inventories in distribution channels, sending prices plummeting. In the United States, paging operators continue to control inventories to improve their financial positions and cash flow.
The market in both China and the United States is expected to weaken further in upcoming months, with no change expected until sometime next year.
Also blamed for the underperformance is a $265 million before-tax charge from phasing out the dynamic random access memory business and another $95 million charge for exiting the MacOS-based computer cloning business.
Christopher Galvin, Motorola chief executive officer, said the company expects much of the same going into the fourth quarter, “where sales growth is anticipated to be less than in the third quarter.”
On the positive side, the company reported overall sales of $7.4 billion, 13 percent above the $6.5 billion sold last third quarter.
President and Chief Operating Officer Robert Growney pointed to Motorola’s Semiconductor Products, Land Mobile Products and Cellular Subscriber Products Sectors as profit makers.
Motorola hopes to profit further from the introduction of new Code Division Multiple Access handsets that will use its own chipsets, not those of Qualcomm Inc., which have been used in the past. The company said its chipsets have better power consumption efficiency and that creating handsets independent of a major competitor is desired.
