PowerPC chip maker Motorola, Inc. today reports its earnings for the third quarter of 2001. The company reported a 22 percent drop in earnings year over year, and said that it incurred a loss of $153 million compared with earnings of $643 million for the same quarter last year.
Motorola president and COO Robert L. Growney said that the company’s wireless handset business returned to profitability this past quarter and reporter higher marketshare than last year, also. The company also made progress in sequentially reducing its pro forma operating loss, although the executive said his company won’t be satisfied until they return to “solid and growing profitability throughout [their] portfolio of businesses.”
Although much of Motorola’s revenue is derived from wireless communications products, there was news on the semiconductor front, as well. It wasn’t good, alas. Motorola indicated a 48 percent drop in sales to $1.1 billion. The semiconductor segment reported an operating loss of $355 million for the quarter, versus earnings of $202 million a year ago. Analysts aren’t entirely surprised, of course — semiconductor sales are off dramatically across the entire industry.
Looking at Motorola’s semiconductor business sequentially, the news didn’t seem as bad — sales declined 14 percent quarter-to-quarter, but the segment’s operating loss remained flat because of “cost-reduction efforts” over the past several quarters. Motorola noted that orders actually rose, and that orders exceeded sales for the first time in a year.
Among its recent successes, Motorola counts networking giant Cisco Systems Inc.’s decision to use the PowerPC G4 microprocessor in several high-end router products. The company also points to its research efforts, which have yielded compound semiconductors that utilize gallium arsenide on silicon wafers.
Like most companies, Motorola is taking a wait-and-see attitude towards future performance, and they’re blaming in part the terrorist events of a month ago in New York, Pennsylvania and Washington D.C. Motorola chairman and CEO Christopher B. Galvin explained.
“Until the unexpected and horrific atrocities of September 11, our predictive indicators seemed to indicate that the world would most probably return to more positive economic growth in the first or second quarter of 2002. These events make near-term forecasting more challenging,” said Galvin.
Galvin went on to suggest that while tax relief, interest rate reduction and “a massive infusion of liquidity by government authorities” will help, Motorola can’t predict the specific timing when the economy will recover.