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January 10, 1997updated 05 Sep 2016 1:09pm

BLEAK YEAR COMPLETE AS MOTOROLA Q4 PROFIT SLUMPS

By CBR Staff Writer

After its dismal third quarter, electronics giant Motorola Inc warned there would be a knock-on effect on its fourth quarter (CI No 3,015), and so it proved to be. The continuing effects of the collapse in memory prices plus $150m charges for job cuts and other restructuring drove earnings down 44% to $238m from $432m last time, on revenue of $7.7bn up 5% on $7.3bn in the same period last year. Earnings per share were $0.39, down from $0.72. Net margins were almost halved in the quarter from 5.9% a year ago to 3.1%. It is the third straight quarterly decline in profit. For the full year earnings slumped 35% to $1.15bn from $1.78bn last time, on revenue that rose 3% to $28bn from $27bn in 1995. Hardest hit was again the semiconductor products business which turned in an operating loss. Sales in the quarter dived by 18% to $1.9bn, while orders were down 11%. For the year sales declined 8% to $7.9bn while orders were down 22% and operating products were lower. The company said charges drove the business into the red and claims it would have made a small profit otherwise. Motorola sees a small sequential increase in semiconductor business but warns year-on-year improvements may not be realized until late in 1997. The general systems segment saw its fourth quarter sales advance 17% to $3.3bn, led by its cellular product lines and computer systems. For the year sales were up 6% at $11.3bn. Sales of messaging, information and media products declined 17% to $876m and although for the year they were up 8% at $4bn the unit still recorded an operating loss. Motorola pins the blame for the dip in this business, especially paging products, on the fiercely competitive paging market in North America where operators reduced inventories to make the balance sheets look more healthy. Land mobile sales increased 26% in the quarter to $1.3bn – up 11% at $4bn for the year – while sales of automotive, energy and components products rose 5%, sales for the year were off 5%. Sales of the space and systems technologies rose 75% in the quarter – 20% for the year. Motorola again warns the start of the deployment phase of the Iridium satellite program will result in higher expenses and additional expenses in the flat-panel display business will increase significantly through 1997. Launch of the first three Iridium satellites due to blast off was delayed until early morning today due to a problem with a microwave link discovered during the launch countdown. The news was as expected on Wall Street an Motorola shares were unchanged after the markets closed at $64.00.

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