Motorola Sinks on Weak Outlook

Motorola (NYSE: MOT) slid to US$16.47, down 82 cents, in morning trading Friday, after the semiconductor and cell-phone maker warned that first-quarter sales and earnings will fall shortof previous projections and could result in an operating loss.

The Schaumburg, Illinois-based company had previously predicted sales of $8.8 billionand earnings of 12 cents per share for the quarter ending in March. However, the company said that it is facing “significant weakness in first-quarter order input across itsbusiness segments.”

Motorola added that “the sharp economic slowdown occurring in the United Statesand inventory corrections taking place broadly in technology marketsworldwide have caused the adverse change in its order pattern. Should the pattern continue, the company expects to incur an operating lossin the quarter.”

The company said it is continuing to “actively adjust its cost structure” andwill “take additional cost-reduction steps,” which it did not identify.

Motorola shares have fallen in recent months, dropping from a 52-week highof $61.53 amid reports of layoffs and slowing demand for handheld phones andelectronic components. Earlier this month, the company said it would cut asmany as 4,000 jobs in its semiconductor products division.

Motorola rivals Nokia and Ericsson have also seen demand for their productsfall. Ericsson, of Sweden, earlier this year announced plans to stop makingtelephone handsets, turning over the production to a third party in order to save costs.

Motorola reported sales of $8.8 billion and earnings of 20 cents per sharein the first quarter of 2000.

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