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Thursday, 7 December, 2000, 14:46 GMT
Motorola warns on profits
Motorola computer chips
The Motorola warning came just two days after Apple's
US tech and telecoms stocks got off to a shaky start on Thursday after Motorola issued a profits warning.

The announcement by the mobile phone maker came just two days after a similar statement by Apple Computer and is the latest in a string of recent warnings from leading tech firms including Hewlett-Packard, Gateway and Nortel Networks.

It was also two days after the US tech-heavy Nasdaq market had recorded its biggest lifetime percentage and points gains in a day.

This had followed hints by Federal Reserve chairman Alan Greenspan that the next move in US interest rates might be down.

Semiconductor blow

Motorola shares lost almost $3 to $15 in pre-opening trade on the Instinet electronic broker system.

European telecoms shares, including Nokia and Ericsson also moved lower.

Motorola said its fourth-quarter sales and earnings would not meet analyst forecasts because of worse-than-expected performance in its semiconductor and personal communications divisions.

It predicted fourth-quarter earnings per share of 15 cents on sales of $10bn, compared with previous expectations of 27 cents EPS and sales of $10.5bn.

The slowdown in semiconductor sales was due to inventory adjustments by customers, Motorola said.

Mobile phone growth

The company said it expected continued strong growth in the global mobile phone market, estimating annual unit sales of 525 million-575 million in 2001 compared with 420 million this year.

But Motorola, which has about 16% of the global mobile phone handset market, second only to Finland's Nokia, said it was experiencing delays in achieving planned cost cuts in mobile phone production.

President and chief operating officer Robert Growney downplayed the long-term significance of the profits warning.

"Even though it is necessary to reduce our expectations for sales and earnings in the short term, we continue to believe that tremendous long-term opportunity exists at three levels of the value chain - embedded chips, embedded electronic systems and end-to-end integrated communication solutions - for wireless, broadband and internet markets," he said in a statement.

Shares sink

Motorola shares had surged briefly on Tuesday, helped by an upbeat revenue forecast issued by Nokia.

But they have since sunk to year-low levels, down from a peak of $61.54 on 7 March and having underperformed the Dow Jones Industrial Average since April.

In early trade on Thursday, the Dow and the Nasdaq Composite both fell.

The Nasdaq took the brunt of the losses, slipping 72.24 points or 2.6% to 2,724.26 by 1442 GMT.

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See also:

05 Dec 00 | Business
Nokia: 'Best is yet to come'
06 Dec 00 | Business
Apple halts stocks rally
27 Oct 00 | Business
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05 Aug 00 | Americas
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