Motorola beats by penny

July 11, 2001 Posted: 2226 GMT

NEW YORK (CNNfn) -- Motorola Inc., the No.2 supplier of mobile phones, reported Wednesday second-quarter results one penny better than estimates, while sales dropped 19 percent.

Schaumburg, Ill.-based Motorola reported second-quarter losses of $232 million or 11 cents a diluted share, excluding special items, compared with a $551 million gain, or 25 cents for the same time period last year.

Including special items, Motorola reported second-quarter losses of $759 million, or 35 cents a share, compared with a gain of $204 million or 9 cents a share in second quarter 2000.

Earnings tracker First Call had expected a 12 cent loss for the quarter.

Motorola also plans to take a charge of $496 million pre-tax, or 24 cents a share after-tax, related to cost-reduction activities and asset impairments, the company said in a statement.

In April, Motorola, which has been stung by a weaker mobile-phone market and a general slowdown in the tech sector, said it expected its second-quarter operating loss to be "a few cents larger" than the 9 cents per share it reported in the first quarter. Prior to that, the Street had been expecting a loss nearer 2 cents per share.

At that time, the company also said it expected to return to profitability in the second half of the year, due partly to its cost-cutting measures and partly to anticipated improvements in the market for its products.

The company this year has implemented a broad restructuring program under which it has: laid off more than 25,000 employees; consolidated its 30 separate units that made communications products into one large division; enlisted new executives to head up its core operating units; and sharpened its focus on the market for wireline broadband communications equipment

Sales for Motorola dropped 19 percent to $7.5 billion.  Motorola said Wednesday sales and order for wireless telephones dropped in the Americas.

"Newly revised government data shows that the decline in communications equipment orders is worse than many in the industry first believed," Motorola CEO Christopher B. Galvin said. "The industry's fundamentals are weak and the imbalance between inventories and demand has spilled over into Europe."

However, Galvin said the semiconductor industry should resume a double-digit growth pattern next year.

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