Schaumburg, Illinois–Motorola, Inc. today announced that it does not expect to achieve its earlier guidance for sales and earnings in the fourth quarter (4Q) of 2000. Operating profits will not meet earlier guidance in the Semiconductor and Personal Communications segments, in part due to delays in achieving expected cost reductions in wireless phone production, the company reports. In addition, slowing market conditions in the worldwide semiconductor industry, believed to be due to inventory adjustments by customers, are adversely affecting the sales and operating profits of the company’s Semiconductor Products Segment.
Sales for 4Q of 2000 are now expected to be $10 billion and earnings per share are now expected to be 15 cents. The earlier guidance given in October was for sales of $10.5 billion and earnings per share of 27 cents. Sales in the first quarter of 2001 are currently expected to be $8.8 billion and earnings per share to be 12 cents. These estimates exclude special items.
Motorola is completing its normal planning process for the upcoming year and intends to provide sales and earnings per share guidance for the full year 2001 when it announces its final results for the current year, in accordance with its normal practice. The guidance is expected to be lower than the estimates given in October of $44 billion in sales and earnings per share of $1.20.
The company began implementing various new cost reduction actions in the third quarter of 2000, which are being followed by additional actions in the fourth quarter of 2000 and will continue in the first quarter of 2001. These actions, which include consolidation of manufacturing operations and out-sourcing of manufacturing, will result in charges against earnings, to be reported as special items, in 4Q of 2000, as well as in the first quarter of 2001. The company also will report gains from the sale of securities in 4Q of 2000.
Motorola continues to expect robust growth in the global wireless telephone market, with unit sales in the range of 525 to 575 million in 2001, up from an estimated 420 million units this year, and expects to fully participate in that growth. The company also believes that the beneficial impact of cost reductions in its product portfolio of wireless telephones will also be evident by mid-year 2001. Inventory adjustments by semiconductor customers should be completed by mid-year 2001, according to Motorola.