Tech giant reports first operating loss in nearly 16 years
Wednesday, April 11th 2001, 12:00 am
By: News On 6
CHICAGO (AP) _ Motorola Inc. reported a first-quarter loss Tuesday that was wider than analysts' already lowered expectations, citing a billion-dollar slump in sales from a year ago. It was the cellphone and chip maker's first quarterly operating loss since the third quarter of 1985, more than 15 years ago.
In the quarter ended March 31, Motorola lost $533 million, or 24 cents per share, compared with profits of $448 million, or 20 cents per share, in the year-ago quarter.
Excluding one-time items, the company lost $206 million, or 9 cents per share. Analysts surveyed by Thomson Financial/First Call expected a loss of 7 cents a share.
Motorola reported sales of $7.8 billion in the first quarter, a decrease of 11 percent from $8.8 billion a year earlier.
The Schaumburg, Ill.-based company reported its results after the close of the markets. Shares of Motorola, which were up $1.50 to $13 Tuesday on the New York Stock Exchange, fell 95 cents in after-hours trading.
The stock also still hasn't recovered from its dive last week _ when it hit an eight-year low of $10.50 on Friday _ and has lost 75 percent of its value since last May when it reached its 52-week high of $52.64.
``This quarter was a difficult one. Order growth weakened across all of the company's business segments,'' said Robert L. Growney, president and chief operating officer. ``We believe this change in customer requirements is part of a major global pattern affecting many technology companies.''
Sales of cell phones and pagers were down 29 percent and orders fell 10 percent, the company said.
``We had a very pessimistic viewpoint ... and they still managed to miss all of my revenue numbers,'' said Dale Pfau, an analyst with CIBC World Markets Corp. ``It's pretty disconcerting.''
Motorola has cut 22,000 jobs since December, bringing its work force down to about 125,000, and Growney said ``substantial cost-reduction activities continue.''
Motorola has been hard hit by slowdowns in its core industries but many analysts say its problems are of its own doing. Motorola failed to connect with consumers during a recent period of runaway worldwide growth in its primary business, cell phones.
Now first-time buyers are dwindling and users are putting replacement purchases on hold amid a slowing economy. And analysts say the company may have misjudged again with a series of next-generation-technology phones due out over the next few months.
``The phones that Motorola has kind of hung their hat on are the higher end models,'' said Todd Bernier of Morningstar Inc. ``They're chasing a market that doesn't really exist.''
He said Motorola's new phones are like Rolls-Royce automobiles when most people are in the market for more sensible models.
``It's a cool thing to have but there's really not many people buying them,'' Bernier said.