Motorola Inc may have seen a slump in profits for the fourth quarter, but the company – which only just over a year ago was growing as fast as Hewlett-Packard Co, did see revenues creep up, so the market heaved a sigh of relief and marked the shares up when trading opened on Friday. The […]
Motorola Inc may have seen a slump in profits for the fourth quarter, but the company – which only just over a year ago was growing as fast as Hewlett-Packard Co, did see revenues creep up, so the market heaved a sigh of relief and marked the shares up when trading opened on Friday. The shares added $1.75 to $65.75. There were lots of sundry charges in the quarter, and Motorola said on Friday it does not expect to report similar charges this quarter those posted last. But the company warned that recovery in its cellular phone market share will take some time despite posted improvements in the sector in the fourth quarter. It’s important to remind everyone that the handset market… has become a very competitive one over the past year or so, Ed Gams, the head of investor relations, told analysts on a conference call. A recovery in market share by us is going to not come easy, and it will take some time, he said. The company last year suffered from too much anecdotal evidence that it had fatally allowed its quality control on cellular handsets to fall behind that of L M Ericsson Telefon AB and Nokia Oy, with the result that new subscribers in droves decided they would be safer with a phone from one of the Scands. Elsewhere in its business, Motorola said cost-cutting and other actions taken in the 1996 fourth quarter are designed deliver a rebound in earnings growth this year, and that it has already begun to see a sequential quarterly increase in orders and sales as the worldwide semiconductor industry enters a cyclical rebound, though improved year-overyear financial results may not be evident until later in 1997. Sales of semiconductor products accounted for 29% of Motorola’s 1996 sales. In its 1996 fourth quarter sales of semiconductor products fell 18% to $1,900m, orders declined 11% and the segment had an operating loss compared with a profit a year ago. As for international markets, it said the global economic outlook is healthy, especially in emerging markets where Motorola is investing heavily, such as Latin America and Asia. We see balanced growth in the developed world as well. In its Messaging, Information & Media Segment, Motorola said sales declined 17% to $876m, while orders were 24% lower, and the segment recorded an operating loss compared with a profit in the year-ago period. The shortfall reflected the sales decline, pricing pressures in the modem business, and restructuring and other charges. In the Land Mobile Products Segment, sales rose 26% to $1.3bn, orders were 26% higher, and operating profits improved. In the Automotive, Energy & Components Sector, sales rose 5%, and orders were 5% higher. Operating profits fell because of continuing pricing pressures in the components and energy-products businesses, and restructuring. In the Space & Systems Technology Group, sales rose 75%, orders fell 18%, operating profits rose; Computer Group orders rose significantly.