AIM (Apple, IBM, Motorola) alliance member Motorola issued a profits warning yesterday, admitting it would fail to meet its earnings target for the fourth-quarter 2000.
Motorola said this was because of less-than-expected profits in its semiconductor and personal communication businesses.
Inventory adjustments by customers are causing a slowdown in market conditions in the worldwide semiconductor-business, the company said. Apple is one of Motorola's customers, the G4 processor is manufactured by the company. Motorola's communications arm, meanwhile, is being hampered by delays in achieving expected cost reductions in wireless phone production.
Share earnings Motorola expects its fourth-quarter sales to reach $10 billion, returning earnings per share of 15 cents. The company originally expected to make $10.5 billion in the quarter.
Analysts had expected the company to earn 27 cents per share, according to First Call/Thomson Financial.
The company is lowering its earnings expectations for 2001 – it originally expected to return $44 billion in sales and to return earnings per share of $1.20 over the fiscal year. Motorola has not yet revealed its new target.
Cost cutting Motorola began implementing cost cutting measures during the third quarter of 2000, these measures will continue during 2001, said Motorola. They include the consolidation of manufacturing, including some outsourcing, the company said.
Motorola continues to expect growth in the global wireless-telephone market, predicting unit sales in the range of 525 million to 575 million in 2001. This is up from 420 million units in 2000. Cost reductions in its product portfolio of wireless telephones and inventory adjustments by semiconductor customers – including Apple – should be completed by mid-2001, the company said.
Apple issued its own profits warning this week, and major players throughout the IT industry have been delivering disappointing results in recent months as personal computer sales decline.