Motorola squeaked by Wall Street estimates Monday with fourth quarter operating earnings of $514m, or 82 cents a share, on sales of $8.5bn. First Call consensus called for a profit of 81 cents a share.
Revenue was up 2 percent from $8.3bn (£5.14bn) in the fourth quarter a year ago. Motorola said it sold many businesses in the past year and that accounts for the anaemic sales growth. Sales from continuing operations were up 7 percent compared to $7.9bn a year ago.
Although Motorola's operating earnings beat consensus, the company's bottom line was dinged by the Iridium satellite venture, which now operates under the regulations of Chapter 11 of the US Bankruptcy Code.
Mostly because of the Iridium woes, Motorola took a charge of $236m, or 26 cents a share. Including charges, Motorola reported fourth quarter earnings of $349m, or 56 cents a share. In the fourth quarter a year ago, Motorola reported earnings of $159m or 26 cents a share.
Looking forward, CEO Christopher B. Galvin said in a statement that Motorola is on the right track. "Motorola's improving performance throughout 1999 is a result of comprehensive strategic, organisational and restructuring changes we took the corporation through in 1997 and 1998," said Galvin. "Although our change process is in its early stages and much remains to be done, it has set the stage for an exciting 2000 and beyond."
Galvin said the company is on its way to delivering revenue growth of 15 percent annually.
Motorola has solid gains across most of its units. The company's personal communications unit, which primarily sells wireless phones, had sales of $3.5bn, up 13 percent from a year ago. Orders were up 12 percent to $3.6bn.
Sales for the wireless phones spiked in Asia and were higher in Europe and the Americas. Motorola said component shortages that affected the fourth quarter should alleviate in the first quarter.
"While component shortages are expected to continue in the first quarter of 2000 and to a lesser degree in the second quarter of 2000, the availability of components continues to improve sequentially," the company said. "This sequential improvement, coupled with a very significant backlog to start the first quarter, is expected to result in higher sales of wireless phones versus the fourth quarter of 1999."
Motorola's paging sales continued to decline amid pricing pressure, the company said.
The network systems unit saw sales fall 14 percent to $1.7bn because of a sharp decline in sales and orders of satellite communications equipment. Motorola said it is focusing on next generation digital equipment for wireless networks.
Motorola had problems with its satellite communications group because of the Iridium flap. Iridium is in discussions with its lenders and creditors regarding plans to restructure its debt. Motorola led a group of current investors in providing a funding commitment to Iridium of $20m. It is being used by Iridium to fund its on-going operations until February 15, while it seeks to attract additional investment and achieve its financial restructuring.
Motorola recorded a special charge of $740m to increase its reserve related to its financial exposure to the Iridium project. Motorola has several contracts with Iridium and isn't being paid. After February 15, Motorola won't be obligated to provide services to Iridium.
Motorola's semiconductor unit saw sales jump 15 percent to $1.8bn. Orders rose 24 percent to $2.0bn.
"The order growth in the second half of 1999 shows that we have built an improved position in serving the fastest-growing segments of the integrated communications solutions and embedded electronics arenas," said Galvin.
For the year, Motorola reported sales of $30.9bn, up from 5 percent from $29.4bn in 1998. Excluding special items, earnings were $1.3bn, or $2.08 per share, compared with $347m, or 58 cents per share a year earlier. Including special items, earnings were $817m, or $1.31 per share, compared with a loss of $1bn, or $1.61 per share, in 1998.
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