The report reflects the malaise afflicting the telecoms, network infrastructure, mobile telephony and PC markets. Motorola expects to record a net loss for 2002, but that it will be profitable “on a full-year basis”, the report claims.
The company's research and development (R&D) costs declined 13 per cent to $944 million in the second quarter. Despite this, the company “continues to believe that a strong commitment to R&D is required to drive long-term growth”. Motorola expects to spend $3.8 billion on R&D in 2002.
Motorola has “improved operational efficiencies, reduced costs, improved operating margins (from 22 per cent to 33 per cent, or $2.2 billion), and expects to see recovery in the semiconductor market as the year continues.”
The company has consolidated its global manufacturing, exited some businesses and discontinued certain products. These moves cost $1.5 billion in Motorola's first six months of 2002 trading. $1.1 billion was spent reorganizing its semiconductor business. This includes elements for letting employees go, mainly in its Arizona, China and Scottish plants.
During the year, Motorola reduced its semiconductor fabrication plants from 18 to 14, and will reduce its capacity to eight plants by early 2003. The company is outsourcing manufacturing to partners such as the Taiwan Semiconductor Manufacturing Corporation.
Given the slow technology market, Motorola accepts that semiconductor industry growth is “difficult to forecast”. It “anticipates” semiconductor sales growth for the full year to be “in the low single digits”, with “sequential improvement in each quarter of 2002.” It expects to see an operating loss for the full year.
Motorola returned a net loss of $2.32 billion in its last quarter, the largest in the company's history. Revenues declined 11 per cent year on year to $6.74 billion.
As of June 29, Motorola held cash and cash equivalents valued at $6.4 billion, compared to $6.1 billion in December 2001 and $4.5 billion in June 2001.