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EDITIONS
Wednesday, 16 October, 2002, 21:44 GMT 22:44 UK
Motorola tumbles as forecasts fall
Motorola mobile user
Mobile phone sales remain relatively buoyant
Shares in mobile communications giant Motorola have plunged by 22%, after the firm admitted that sales and forecasts for the rest of this year and next would be significantly worse than expected.

Only on Tuesday, the company cheered investors by recording its first quarter-year of profit since 2000.

But in a conference with analysts and the press before the markets opened on Wednesday, the firm said business was slowing sharply in some of its core markets, including semiconductors, broadband and wireless infrastructure.

It cut its sales forecast for the last three months of this year from $7.5bn (4.8bn) to $7.1bn, and reduced its profit forecast for the quarter by one-third, to $222m.

The forecast earnings would still be twice as high as those in the three months to end-September, but analysts were depressed by the apparent endlessness of the hi-tech slowdown.

On Wall Street, Motorola's shares fell by $2.25 to close at $7.85.

Industry holds back

Motorola laid the blame for this latest set of downgrades firmly on commercial clients, who are sharply reining in spending as the US economy flounders.

Previously, the firm has been held back by weak performance at its large mobile phone division, but it has recently started to gain market share, largely at the expense of Sweden's Ericsson.

Motorola shares
Now, sales of most of its products aimed at industry are tipped to be at best stagnant.

Ericsson and mobile market leader Finland's Nokia have already cut their sales estimates for the quarter, mainly thanks to weak corporate demand for network equipment.

And the microchip sector, which had its worst ever year in 2001, has shown no signs of recovery.

Motorola declined to comment on persistent rumours that it may sell its semiconductor division - source of some of the most chronic underperformance - to chip company STMicroelectronics.

See also:

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