Motorola Inc. reported higher sales but lower earnings for fiscal year 1996, saying that strategic decisions made during the fourth quarter will set the stage for a renewal of profit growth in 1997.
“We have initiated a reinvigorated process of discontinuing those development programs that have not lived up to their promise,” said Motorola Chief Executive Officer Christopher Galvin, “further reducing costs in existing businesses that are not achieving adequate profitability and refocusing our investments where we possess, or are cultivating, leadership core competencies.”
Sales for 1996 rose 3 percent, to $28 billion from $27 billion in 1995. Earnings were $1.15 billion compared with $1.78 billion the previous year. Fully diluted earnings per share were $1.90 compared with $2.93 in 1995. Net margin on sales was 4.1 percent for full year 1996, compared with 6.6 percent a year ago.
Fourth quarter net earnings declined to $238 million, or 39 cents a share, compared with $432 million, or 72 cents a share, in fourth quarter 1995. Fourth quarter sales totaled $7.7 billion, up 5 percent from $7.3 billion in fourth quarter 1995.
Orders declined in the Messaging, Information and Media Segment, both for the full year and fourth-quarter periods. While that segment’s sales for 1996 rose 8 percent to $4 billion, orders were down 3 percent for the year and operating profits were lower in 1996. In the fourth quarter, segment sales dipped 17 percent to $876 million, and orders were 24 percent lower. The segment had an operating loss compared with a profit in 1995 due to the decline in sales, pricing pressures in the modem business and restructuring/unusual charges, Motorola said.
The company said there was a decrease in fourth-quarter orders for paging products because paging operators had reduced inventories.
Orders increased for the Cellular Subscriber Sector, led by significant growth in Europe and the Americas. Cellular Infrastructure Group orders also were up, with significant growth in the Americas and Asia-Pacific regions. Both Cellular Subscriber and Cellular Infrastructure divisions reported lower orders for Japan.
In the Land Mobile Products Segment, orders were higher for both analog and digital equipment systems and products. Sales rose 11 percent to $4 billion, orders increased 16 percent and operating profits were higher. Fourth-quarter sales were up 26 percent to $1.3 billion and orders were 26 percent higher and operating profits improved, Motorola said.
During the fourth quarter, the company divided its General Systems Segment into two units, pulling infrastructure sales and network management away from the sale of wireless handsets and personal computers, which have become consumer products. Cellular phones, in particular, experienced enormous pricing pressure in 1996.
