Motorola shares rise on job cuts

Despite posting losses, investors sent Motorola shares soaring on Wednesday

A day after posting losses of more than quarter of a million dollars, and a sharp decline in sales, Motorola has warned Wall Street to expect further profit woes and more job cuts.

But investors sent shares rising 16% in afternoon New York trading on assurances from Motorola that the worst of the technology difficulties is over for its all-important mobile-phone and semiconductor units.

Motorola expects mobile sales to propel profits in the next six months

"It was a little bit like people are feeling good not because things are improving but because the beatings have stopped," said First Union Securities analyst Mark Roberts.

Motorola said it expects to post a slight loss in the three months ending 30 September and to be solidly in the black by the end of the year.

It also upped its number of redundancies by 4,000 to 30,000.

Higher mobile sales

The company said it expects higher mobile-phone sales to contribute to an increase in the company's revenues - by about 5% each quarter. It also expects its mobile unit to be profitable during the second half of the year.

"There's a sense of confidence and optimism about the future," said Mike Zafirovski, who heads the mobile-phone unit.

But some analysts remain sceptical whether the company can recover quite so quickly.

"The growth that they're trying to get into the year is going to be difficult with the semiconductor group earning the way that it is, said J P Morgan H&Q analyst Ed Snyder. "People are misinterpreting what was said [and] what wasn't said."

Analysts surveyed by Thomson Financial/First Call had expected break-even results in the third quarter and a profit of 11 cents a share in the fourth quarter.

Great expectations

Despite Motorola's expectations, the expected gains represent a 17% decline from year ago the third and fourth quarter of 2000.

On Wednesday, Motorola reported its second successive quarter in the red. But the loss of $232m, equivalent to 11 cents a share, was less than analysts had feared.

Wall Street had expected Motorola to post a 12 cent a share loss, after the firm, the world's second-ranking mobile-phone maker, warned in April of lower profits.

In an effort to stem the bleeding red ink, Motorola has slashed jobs by 26,000 out of a total work force of 147,000. It is also decreasing the number of types of phones it makes and the number of parts in each phone.