Motorola Revenue and Earnings Estimates Cut

Friday, March 9th 2001, 12:00 am
By: News On 6

SCHAUMBURG, Ill. – Motorola Inc., the No. 2 cellular-telephone maker, had its revenue and earnings estimates cut by analysts after company executives again said orders for chips and mobile phones are falling.

Analysts at Merrill Lynch & Co., Deutsche Banc Alex. Brown, and ABN Amro lowered earnings, revenue or stock price estimates after speaking with the company's management. The company couldn't immediately be reached for comment.

Motorola is being hurt by slumping demand for cell phones and competition from Nokia Oyj. It said last month the deteriorating U.S. economic outlook may spread to other countries and has crimped Motorola's semiconductor sales to customers such as General Motors Corp., Apple Computer Inc. and Cisco Systems Inc.

"Management reemphasized the weak order-and-revenue picture given for mobile phones and semiconductors," Brian Modoff, analyst at Deutsche Banc, wrote in a report to clients.

Shares of the Schaumburg, Illinois-based company fell 45 cents to $15.80 in early trading.

Merrill Lynch analyst Michael Ching downgraded Motorola shares to long-term "accumulate" from long-term "buy." Ching, who's near-term rating is "accumulate," cut his per-share earnings estimate for 2001 to 15 cents from 50 cents.

ABN Amro analyst Kenneth Leon reduced his per-share earnings estimate to 22 cents from 45 cents, and dropped his 2002 earnings estimate to 65 cents from 80 cents. He maintained his "add" rating and has a 12-month price prediction of $22 a share.

Modoff dropped his first-quarter estimates to $7.7 billion in revenue from $8.1 billion and a loss of 8 cents a share from 2 cents. He dropped his 2001 estimates to $36.8 billion from $38 billion and profit to 8 cents a share from 18 cents.

The company said on Feb. 23 it may have a first-quarter loss if orders continued falling and it expected to miss sales forecasts of $8.8 billion because customers are using excess inventory.

In January, Motorola said a drop in cell-phone orders is an indication sales may fall in coming months. The company had been expected to earn 12 cents a share in the first quarter, and is now expected to have a loss of 5 cents a share, the average estimate of analysts polled by First Call/Thomson Financial.

Motorola said it hasn't had a quarterly loss from operations since the third quarter of 1985.