Motorola warning deepens sector sorrows

Motorola, the world's second-largest handset maker, today added to mobile phone gloom by predicting that industry sales this year will be lower than previously warned.

The company's shares dropped by over five per cent to $16.25 in early trading on the New York Stock Exchange. Robert Growney, Motorola president and CEO, told analysts in a conference call that worldwide sales of mobile handsets will be lower than it had previously expected. The company last month estimated they would be at the low end of a 525 to 575 million range. Growney said: "We're looking at a number that I think is going to be below 500 million." The company had already said that a sharp decline in orders could push it into loss. Both Nokia and Motorola, the top two mobile makers, last month warned that the global demand for mobiles would weaken. Earlier this month, Gartner Dataquest reported that global sales of mobile phones had hit 412.7 million in 2000. But it also warned that global capacity had caught up with global demand. Bryan Prohm, senior analyst at Dataquest, said: "There is some significant stock carry-over to the beginning of 2000." Peter Richardson, principal analyst at the company, said: "The long-term prospects for the mobile sector look tough. Few manufacturers are able to generate healthy profit margins, placing the necessary investments in next generation handsets at risks."