Subject: [NEXTEL-1] Motorola posts $116 million profit, improved sales

From: [email-masked]
Date: Mon, 13 Oct 2003 21:25:33 -0400

Motorola posts $116 million profit, improved sales
09:23 PM EDT Oct 13

DAVE CARPENTER

CHICAGO (AP) - Motorola Inc. issued better-than-expected third-quarter results and
an upbeat forecast Monday, rushing out its earnings report early to counter a
Moody's downgrade of its debt and concern about its future.

The company announced a $116 million profit and cited a boom in orders for new
cell phones as evidence its stuttering recovery remains on track despite a pending
leadership change and Wall Street's skepticism. Sales - a figure watched closely
as a barometer of its health - rose 5 per cent instead of falling as many industry
experts had predicted.

Even its money-losing semiconductor business, which the company said last week it
intends to spin off, picked up more orders in a modest recovery that could stir up
more interest among prospective buyers.
Net earnings for the three months ended Sept. 27 amounted to 5 cents a share,
compared with a gain of $111 million, or 5 cents a share, for the same period in
2002. Excluding $16 million in special charges, earnings were $132 million or 6
cents per share - 3 cents higher than the consensus estimate of analysts surveyed
by Thomson First Call.

Revenues climbed to $6.83 billion from $6.53 billion, thanks partly to an 8 per
cent jump at its No. 1 business unit, mobile phones, which totaled $2.9 billion.

The Schaumburg, Ill.-based company increased its guidance for fourth-quarter sales
to between $7.5 billion and $7.8 billion, up from $7.4 billion.

"We are now seeing early results from the decisive actions taken in a very
difficult telecom and semiconductor global environment over the last three years,"
said president and chief operating officer Mike Zafirovski.

Motorola had scheduled its earnings report to be released on Tuesday after the
close of trading. It decided instead to issue them before the stock market opened
Monday as a result of the downgrade of its debt late Friday by Moody's to one step
above junk status.

Moody's said it made the downgrade in light of "the weakened outlook for most of
Motorola's business segments" and expected changes after the resignation of
chairman and CEO Christopher Galvin, who is staying on until a successor is named.

But company officials strongly disagreed with that characterization, and
Zafirovski, who is a candidate to replace Galvin, said the third quarter "signals
some positive momentum in key aspects of our business."
Most notably, orders rose 25 per cent from a year earlier - including 44 per cent
for its cell-phone business, to $3.7 billion. While declining market share in
China caused a drop in operating earnings for the phone unit - to $165 million
from $225 million - the company cited strengthened demand in North America and
elsewhere.

Zafirovski acknowledged to analysts that the company has been slow to come to
market with some of its camera phones. Competitors have gotten a significant head
start with that item, one of the hottest new consumer electronics products.

"We wish we'd have had more camera phones earlier in the year," he said on an
afternoon conference call. "But they will be 50 per cent of our portfolio in Q4."

Company executives also maintained that Motorola is in strong position to repay
its debt that matures in 2005 despite concerns voiced by Moody's and others.
Galvin called it one of the strongest quarters in its 75-year history, emphasizing
a strengthened financial situation.

"Not since 1983, 20 years ago, has Motorola had such a strong balance sheet," he
said. "This is not by chance. We generated $1.1 billion of positive operating cash
flow this quarter."
The officials had no comment on the chip-unit spinoff or CEO search process, which
began when Galvin announced his resignation Sept. 19, citing differences with the
board over strategy and the company's direction.

Morningstar Inc. analyst Todd Bernier said the results show Motorola has done a
good job tightening up its business. But he noted that the rosier sales
projections, tied largely to the company's 35 new cell phones in the second half,
come with profitability falling because sales prices are dropping.
"Sales were higher and orders were higher, so you've got to give them some
credit," he said. "But when you dig a little deeper, I'm not sure I like what I
see."

The semiconductor business lost $76 million and sales fell 4 per cent to $1.2
billion, although orders rose 8 per cent to $1.4 billion.

"Semis continue to recover, maybe a little bit behind their competitors, but the
progress is such that prospective suitors are unlikely to be frightened away,"
said Matt Hoffmann, an analyst for SoundView Technology Corp. in Greenwich, Conn.

Motorola's third-biggest business, wireless networking equipment, recorded
operating earnings of $61 million, with sales up 2 per cent to $1.1 billion and
orders up 23 per cent to $1.1 billion.
Motorola shares rose 8 cents to close at $13.87 on the New York Stock Exchange.
After hours, when the company held its conference call, they fell 6 cents.

http://www.cbc.ca/cp/business/031013/b101330.html

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges or Refill Kits for your HP, Epson, Canon or Lexmark
Printer at MyInks.com. Free s/h on orders $50 or more to the US & Canada.
http://www.c1tracking.com/l.asp?cid=5511
http://us.click.yahoo.com/mOAaAA/3exGAA/qnsNAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/