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Motorola sees slowdown
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January 11, 2001: 9:57 a.m. ET
Anticipates flat wireless handset sales, slowing semiconductor revenue
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NEW YORK (CNNfn) - Motorola Inc. confirmed Thursday that its first-quarter is on track to meet Wall Street forecasts, though it is anticipating sales and margins in its personal communications and semiconductor units to decline.
In a conference call, Motorola confirmed that it is on track to pull in sales of $8.8 billion and earn 12 cents a share in the first quarter of 2001, in line with Wall Street forecasts. However, the world's No. 2 wireless handset maker opted not to provide guidance for the remainder of the year because of the difficulty in assessing conditions in the current economic environment.
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"While we have made some progress in the past year, it will not have an impact in the first half of 2000," Motorola President Bob Growney told analysts. "We do not expect to see significant improvement in the next three to six months, but with cost-cutting and new products, we expect to see things pick up in the second half," he said.
 Motorola late Wednesday reported an operating profit of $335 million, or 15 cents a share, in its fourth quarter, in line with analysts' lowered estimates though below the 26-cent operating profit it posted a year earlier. Revenue for the quarter was $10.1 billion.
All the same, the company said Thursday that it suffered from big drops in orders in its semiconductor and handset units during the fourth quarter, which will lead to lower sales and margins in its chip unit and personal communications segment in the first quarter.
The company revised its outlook for 2001 semiconductor growth to between 10 percent and 15 percent from earlier projections of between 35 percent and 40 percent, mostly due to excess inventory sitting on warehouse shelves at many of its clients. "Growth could occur if inventory adjustments are completed more rapidly than expected," Growney said.
Motorola forecasts global handset sales at 525 million units to 575 million units this year, compared with 410 million last year, expecting results toward the lower end of the range. Motorola also expects sales of its microchips to increase 10 percent to 15 percent this year.
Motorola, which competes against Finland's Nokia Corp. and Ericsson of Sweden, said it believes its total fixed-asset expenditures will drop to $2.5 billion in 2001. It said its tax rate will be 34 percent.
Shares of Motorola (MOT: Research, Estimates) fell 69 cents to $20.50 in early trading Thursday. They've fallen 52 percent in the past year. 
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Motorola
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