CHICAGO-On the surface, the second-quarter results of vendor Motorola carry a breath of optimism with a $119 million profit, or 5 cents per share.
But the robust figure emanates from special one-item factors like the reversal of previous severance charges and investment income, which amount to $100 million.
This leaves the company with a miniscule $19 million net profit, a result that did not cheer Wall Street as Motorola’s stock fell.
In spite of the bleak picture, the report amounts to the fourth consecutive profitable quarter for a company that seemed mired in losses two years ago. It is the tenth consecutive quarter of positive operating cash flow.
The situation generally is one of decline on many fronts. Sales dropped to $6.16 billion in the quarter from $6.87 billion a year ago. In its cell-phone sector, the company suffered a sales plunge of 13 percent to $2.3 billion with orders also falling 13 percent to the same $2.3 billion.
In its semiconductor unit, Motorola experienced an 11-percent sales drop to $1.1 billion, while orders fell 23 percent to $1 billion. In its infrastructure division called global telecom solutions segment, sales dropped 17 percent to $1 billion and orders dropped 15 percent to $930 million.
The SARS epidemic and inventory overload partly accounted for the poor showing on the quarter, according to the vendor.
“While the company’s 10-percent decline in sales vs. last year is a disappointment, the fact that earnings per share, excluding special items, was only 1 cent lower is evidence of the progress the company has made in improving its cost structure, in what is still a difficult environment for technology companies.,” said Mike Zafirovsky, president and chief operating officer at Motorola.
