NEW YORK-Motorola Inc. reported first-quarter earnings of $325 million, a level below the same quarter a year ago but ahead of analysts estimates.
The announcement was made public April 7 just before the close of trading on the New York Stock Exchange. Motorola stock closed Monday at a share price of $61.125, an increase of $1.375.
The Schaumburg, Ill., technology giant said it earned the equivalent of 53 cents per share on sales of $6.6 billion, including gains, which accounted for less than 10 percent of pre-tax profits, from the sale of an investment and favorable patent settlements. Analysts estimated that Motorola earned at least 48 cents per share, excluding the gains.
By comparison, however, Motorola earned $384 million, or 63 cents per share on sales of $7 billion during the first quarter of last year.
Motorola said the decline in sales for the latest quarter largely reflected a 16 percent drop in sales of semiconductor products, for which orders were off by 5 percent. But the company said this key segment of its business had become profitable again in the first quarter after suffering an operating loss during the last quarter of 1996.
A week prior to Motorola’s quarterly announcement, outside analysts affirmed the rebound in semiconductors, which are a leading indicator for high technology products. “The semiconductor industry continues to recover from the correction experienced in 1996, but we observe nothing unusual from the supply or demand side … to suggest the recovery is anything other than a steady, gradual improvement in shipments and orders,” said securities analysts Charles Boucher and Christopher F. Bunn in a report for UBS Securities LLC, New York.
Compared to the first quarter of 1996, Robert L. Growney, president and chief operating officer of Motorola, said the company’s cellular products segment experienced a 4 percent increase in sales to $2.7 billion. Orders rose 3 percent and operating profits were higher, he said. This business segment comprises the Cellular Subscriber Sector, the Cellular Infrastructure Group and the Network Management Group.
Overall, Cellular Subscriber sales increased. In Europe, the Western Hemisphere, China and the Asia-Pacific region, sales were up, while they declined in Japan and Korea.
The Cellular Infrastructure Group, which Motorola said, “has been historically characterized by large orders and irregular purchasing patterns,” experienced a decline in sales compared to the first quarter of 1996. Higher sales in the Western Hemisphere were offset by lower sales in the Asia-Pacific region, Japan, China and Europe.
In Motorola’s Land Mobile Products segment, sales increased 18 percent over first-quarter 1996 to $977 million. Orders rose by 36 percent and operating profits were higher. In this segment, Motorola noted that orders for its integrated Digital Enhanced Network equipment rose significantly, including more than $200 million from Nextel Communications Inc.
However, sales in the company’s Messaging, Information and Media segment declined by 7 percent to $924 million and operating profits were lower, although orders rose by 1 percent.
“The decline in sales and profits was largely attributable to the Paging Group, which experienced a significant decline in sales to North American paging operators for the second consecutive quarter,” Motorola said. “Management believes these operators continued to reduce inventories in order to improve their financial positions and cash flow; [we] also believe sales by (paging) operators to consumers in North America continued to grow.”