Shares of Motorola Inc. plummeted over 21 percent after the company curbed its fourth-quarter and 2003 earnings outlook Wednesday, citing weakening demand in its wireless, broadband and semiconductor businesses.
The dampened expectations come after the company reported third-quarter earnings late Tuesday of US$111 million, or $0.05 a share, on revenue of $6.4 billion.
But despite turning a profit for the quarter ended Sept. 28, sales slowed compared to the year-ago quarter, setting the stage for downscaled expectations.
The company reported revenue of $7.4 billion for 2001’s third quarter, with a net loss of $1.4 billion, or $0.64 a share.
Motorola slashed its 2002 fourth-quarter revenue expectations of $7.5 billion to $7.1 billion Wednesday, with earnings cut from an expected $0.10 a share to $0.04 a share.
For 2003, the company expects revenue to total $27.5 billion with earnings of $0.40 a share, compared to the previous forecast of $29 billion in revenue with earnings of $0.45 a share.
In a statement released Tuesday, Motorola Chairman and Chief Executive Officer (CEO) Christopher Galvin said that the global economic recovery was being delayed by “examples of corporate malfeasance coupled with a diverse set of economic and political variables” which were taking their toll on the company.
Although the cell phone and semiconductor maker has been able to cut costs thanks to a two-year restructuring process that has significantly reduced its workforce, an overall drag in the wireless, broadband and semiconductor businesses has taken a bite out of sales.
The Schaumburg, Illinois, company has already reduced its workforce from 150,000 employees in August of 2000 to 100,000 by the end of the third-quarter, and plans to reduce that amount to 93,000 employees by mid-2003.
Shares in the company (MOT) dropped 21.29 percent to $7.95 in mid-afternoon trading Wednesday as the market reacted to the news.