Motorola Beats Forecasts with Improved Performance

Strategic Insights -

Motorola, the Chicago-based telecommunications equipment and semiconductor manufacturer, has reported a second-quarter net profit of $273m before charges, surpassing market forecasts. This significant turnaround is largely attributed to improved performance from its semiconductor operations, good growth from digital cellular phones, and a slight pick-up in Asian business. However, the company has also warned that a financial restructuring at Iridium, in which Motorola holds a minority shareholding, could lead to an additional special charge in the third quarter.

Key Takeaways:

  • Motorola's second-quarter net profit of $273m before charges exceeded market forecasts, driven by improved semiconductor operations and digital cellular phone growth.
  • The company's semiconductor business saw a 9% sales increase to $2bn and a 20% rise in orders to $2.1bn, with an operating profit of $80m.
  • The personal communications business reported a significant increase in operating profits, from "several times" year-on-year to $125m, with sales up 17% to $2.8bn.
  • Analogue phone sales declined, but digital phone sales increased "very significantly".
  • Motorola held a minority shareholding in Iridium, which is undergoing financial restructuring, potentially leading to an additional special charge in the third quarter.
  • The company had previously incurred a massive $1.95bn restructuring charge in 1998, resulting in a quarterly deficit for the first time in 13 years.
  • Motorola's CEO, Christopher Galvin, expressed satisfaction with the progress, acknowledging that the company continues to face numerous challenges.

Statistics:

  • Second-quarter net profit: $273m before charges.
  • Semiconductor sales: $2bn, a 9% increase.
  • Semiconductor orders: $2.1bn, a 20% rise.
  • Operating profit in semiconductor division: $80m.
  • Operating profits in personal communications: $125m, up "several times" year-on-year.
  • Sales in personal communications: $2.8bn, a 17% increase.
  • Earnings per share: 44 cents (excluding charges), exceeding analysts' average forecast of 41 cents.
  • Earnings per share (including charges): 33 cents.
  • Iridium restructuring charge (potential): additional special charge in third quarter.

Sources:

  • Financial Times Limited, "Motorola beats forecasts with improved performance", [year not specified].