YOU ARE AT:Archived ArticlesPRICING PRESSURES CONTINUE FOR MOTOROLA

PRICING PRESSURES CONTINUE FOR MOTOROLA

Motorola Inc., remaining cautious about its financial outlook for 1998, said it likely will reach $7.9 billion in sales with earnings per share around 22 cents for the fourth quarter.

The manufacturer, which implemented a restructuring program months ago, last week exceeded Wall Street’s estimates of 1-cent per-share earnings for the third quarter, recording 7 cents per share after-tax, compared with 51 cents per share after-tax in the third quarter 1997. Earnings totaled $40 million, compared with $308 million the previous year.

Robert Growny, president and chief operating officer of Motorola, said the company generated an estimated $140 million in savings during the third quarter as a result of manufacturing consolidations, cost reduction and restructuring programs. He said the company is on track to realize an annualized savings rate of at least $750 million by mid-1999.

Motorola so far has reduced employees by about 7,800 worldwide. The company’s goal is to eliminate a total of 15,000 positions and abandon non-performing businesses. Motorola also realigned its communications-related businesses into the Communications Enterprise in July.

Motorola’s results show a turnaround from previous quarters, but the company continues to see worldwide pricing pressures in its equipment products and semiconductor businesses, and many of Motorola’s core businesses still saw a slowdown during the quarter.

Though sales of cellular products increased 9 percent to $3 billion, orders fell 2 percent. Handset sales and orders declined as well, as the increase in sales of orders of digital products increased but was offset by an extreme decline in analog product sales.

Sales in the company’s Messaging, Information and Media segment fell 38 percent to $552 million and orders were 10 percent lower. Paging group orders were lower than a year ago due to a significant decline in Asia, only partly offset by higher orders in Pan America, said Motorola. Semiconductor sales decreased 14 percent to $1.8 billion and orders were 10 percent lower.

Motorola reported sales of $7.3 billion for the third quarter, down 3 percent from $7.4 billion a year earlier. In the first nine months, sales decreased 2 percent to $21.1 billion from $21.5 billion in the first nine months of 1997. Excluding special charges, earnings for the nine months were $188 million, or 31 cents per share after-tax in 1998, compared with $986 million, or $1.62 per share after-tax a year earlier. The company recorded special charges of $117 million pre-tax, or 14 cents per share after-tax, in the third quarter. The charges include a write-off in connection with the acquisition of Starfish Software Inc., partially offset by gains on business and asset sales.

ABOUT AUTHOR