Motorola posts 10% sale slump
Sales fell 10% as demand slumped in Asia and the company said sales in the current quarter may also drop.
Net income in the quarter was five cents a share, compared with a net loss of $2.32 billion, or $1.02 a share, in the year-earlier period when the company wrote down the value of some assets, Motorola said in a statement. Sales fell to $6.16 billion.
Motorola said net income in the third-quarter will probably be break-even to two cents a share. Sales will be $6.3 billion to $6.5 billion. Chief executive Chris Galvin is wrestling with slower sales in Asia, particularly China. He’s cut jobs and tried to boost revenue from other businesses to compensate for falling sales from phones and the semiconductors used to run them.
“Motorola is executing on cost cutting and gotten better profitability wise,” said John Krause, an analyst at Thrivent Financial for Lutherans, which manages $57 billion in assets, including 2.9 million Motorola shares.
Motorola last month said per-share profit would be break- even before some gains and costs in the second quarter. On that basis, the company reported a profit of one cent a share.
Motorola made no forecast for 2003 results.
In April, the company forecast sales of as much as $28 billion and net income in a range of 35 cents to 40 cents.
The company in April forecast about 430 million wireless phones will be sold industry-wide this year, the low end of a previous estimate. Sales at the company’s mobile phone division fell 13% to $2.33 billion from $2.68 billion in the second quarter of 2002.
Motorola shares rose 28 cents, or 3%, to $9.78 in New York Stock Exchange composite trading. They have risen 29% this year.
Increased competition and an outbreak of severe acute respiratory syndrome in China led to Motorola handsets, built with the company’s semiconductors, being stuck in distributor and vendor warehouses. The company shut its Chinese head office in May for two weeks because an employee caught SARS.
Motorola forecast last month that phone sales would decline 30% in China and 20% in Asia in the second quarter.
Local suppliers TCL Mobile Communications Co and Ningbo Bird Co are taking share from Motorola in China, while Nokia Oyj, the world’s biggest cell-phone maker, is targeting Asia as European demand stalls.
Tomorrow, Nokia is likely to report second-quarter earnings per share of 13 euro cents (14.7 cents), down from 18 cents a year earlier, according to a survey of 12 analysts by Bloomberg News.
Samsung Electronics Co, the third-largest mobile-phone maker, may say tomorrow second-quarter profit fell 42%, analysts surveyed by Bloomberg said.
The South Korean company also competes with Motorola in making semiconductor chips.
