NEW YORK-Despite continuing paging and satellite sector laggards, Motorola Inc. maintained significant forward momentum in the last quarter of 1999. Earnings rose by 233 percent to $514 million, or 82 cents per share, compared with $159 million, or 26 cents per share, a year earlier.
For the full year, 1999 income including special items was $817 million, or $1.31 per share, compared with a loss of $1 billion in 1998.
In the personal communications segment, which comprises wireless end-user devices, fourth-quarter sales rose by 13 percent to $3.5 billion, and orders increased by 12 percent to $3.6 billion. Operating profits totaled $243 million, up from $52 million during the same quarter of 1998.
Motorola said components shortages, which all handset makers have experienced due to burgeoning demand, likely will continue, but diminish gradually during the first and second quarters of 2000.
By contrast, sales and orders for paging products “declined significantly in all regions due to lower unit volumes and continued pricing pressures,” the company reported.
However, it also noted, “consumer two-way radio product sales and orders were significantly higher.”
Dragged down by satellite sector problems, network systems segment sales declined by 14 percent to $1.7 billion although orders increased by 18 percent to $1.8 billion. Operating profits declined to $246 million from $276 million posted during the year-ago quarter.
“Excluding the very significant declines in the sales and orders of satellite communications equipment, segment sales would have increased 1 percent and orders … 48 percent,” the company said.
In its earnings press release, Motorola said Iridium L.L.C., which has operated under Chapter 11 federal Bankruptcy Code protection since August, continued to add customers and experience good system performance during the final months of last year.
During the last quarter, Motorola wrote off $740 million of its investment in the satellite carrier while also joining other investors to provide $20 million to Iridium.
“[This] is being used by Iridium to fund its operations until Feb. 15 while it seeks to attract additional investment and achieve financial restructuring,” Motorola said.
Merle Gilmore, president of Motorola’s Communications Enterprise, which completed its first full year of operations in 1999, offered an upbeat assessment during the company’s conference call last week.
With its new Aspira communications architecture, Motorola has positioned itself for the next generation of telecommunications, which is moving away from today’s hierarchical structure. This “new world” will be characterized by “distributed, peer-to-peer, Internet Protocol-based network infrastructure,” he said.
For this up-and-coming environment, Motorola is developing “applications and end-user devices that will offer consumers the same compelling experience they get today from their trusted cell phones,” Gilmore said.
