Motorola denies cash crisis ahead of financial results

Analysts will use Motorola's financial results, due Tuesday afternoon, as an indication of the health of the mobile sector

Ahead of its quarterly results -- expected to show a loss in the first quarter of this year -- mobile phone manufacturer Motorola has rejected claims that the company is in financial trouble.

Motorola will announce its earnings for the first three months of this year on Tuesday afternoon. As one of the biggest companies in the mobile sector, its figures will indicate just how difficult 2001 has been for the mobile sector -- a year in which Motorola has been forced to cut thousands of jobs. The company has already warned that it will almost certainly record a loss for Q1 2001.

The US firm has denied an article published last week that claimed Motorola was facing a liquidity crisis. This report claimed that the company might have borrowed more money than it could afford to repay -- causing Motorola's share value to drop 30 percent on Friday. However, Motorola has insisted that it is not facing a cash crisis. "Motorola today is financially sound. Any suggestion or erroneous report that Motorola faces a serious liquidity problem is simply not correct and is not supported by fact," said Bob Growney, Motorola president and chief operating officer in a statement.

Like all its rival handset manufacturers, Motorola has been hit by a drop in demand for mobiles. This is partly due to increasing market saturation, but the slowdown in the US economy has also been blamed. At last month's CeBIT computer show, it revealed that it was close to announcing a deal for 500,000 of its Timeport 260 handsets.

Motorola, the second largest mobile phone maker behind Nokia, is expected to announce a loss of 7 cents per share, compared to earnings of 20 cents per share a year ago. It claimed recently that positive feedback it received at CeBIT where it unveiled four new GPRS handsets gave it confidence for its long-term prospects.

However, other mobile makers are suffering badly. Philips may be planning to sell its mobile handset division -- a move already taken by Ericsson. Siemens, the fourth-largest mobile phone maker, announced on Tuesday that it was eliminating 2,000 jobs, or a quarter of its workforce in handset manufacturer, from three German production sites.

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