More job cuts at Motorola as Q3 forecast worsens

Motorola warns that it is on track for a third successive loss-making quarter, as the slowdown in the mobile sector continues
Written by Graeme Wearden, Contributor

The run of bad news in the mobile phone sector continued on Thursday as US manufacturer Motorola announced that its sales figures for the third quarter of this year will probably be worse than previously predicted.

Motorola had previously expected that Q3 sales would be up five percent compared to the second quarter of 2001, but it now does not expect to see any improvement. It also expects to make a loss of between five and eight cents per share. If true, this would be the third successive loss-making quarter for the company, which until this year had never experienced a non-profitable quarter.

In its announcement, the company blamed "softer than expected overall industry demand in the telecommunications equipment markets" for the disappointing news. Motorola also said that 2,000 jobs will be cut from its Global Telecom Solutions Sector by the end of the year -- taking the total number of Motorola redundancies this year to 32,000.

Despite the predicted disappointing sales figures, a worst-case scenario of a loss of eight cents per share is still an improvement on the second quarter of this year, when Motorola lost 11 cents per share. "The improvement in the operating loss sequentially from second quarter is attributable to increased sales and improved profitability in our Personal Communications Sector and Commercial, Government and Industrial Systems Sector," explained president and chief operating officer Robert L. Growney,

Growney added that all other segments of the company are expected to experience sequential declines in sales and profitability.

Figures released last week by Gartner Dataquest showed that in the second quarter of this year Motorola had a 14.8 percent share of the global mobile phone market, behind market leader Nokia, which had 34.8 percent. Gartner Dataquest found that global sales of mobile phones fell in Q2 2001 compared to the Q1 -- the first quarter-on-quarter drop ever.

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