WASHINGTON-Last week’s annual meeting of the World Bank and International Monetary Fund ended with a blueprint-but not a bold solution-for containing a worsening global financial crisis that is taking a toll on wireless firms in the global market.
Highly symbolic of the contagion, which began 15 months ago in Thailand and since has spread throughout Asia to Russia and Latin America, was the hit Motorola Inc. took in the third quarter in part because of the weak overseas sales.
“Regrettably, the Asian economy and slowing of global economic growth have impacted Motorola since earlier this year, just as those factors are now readily apparent and affecting many other global corporations,” said Christopher Galvin, chief executive of Motorola.
Indeed, the Schaumburg-based company reported paging sales fell 38 percent to $552 million from $885 million. Compounding Motorola’s woes are delays in the introduction of new mobile phones, slow growth in the semiconductor sector and internal restructuring. The confluence of all those forces have contributed to a loss of more than 40 percent in Motorola’s stock since last year.
Likewise, as RCR reported Sept. 28, prospects are gloomy for third-quarter earnings of Alcatel Alsthom, L.M. Ericsson, Philips Electronics NV, CellStar Corp., IFR Systems Inc., Harris Corp. and others.
More than anything, the week of discussion among financial officials from around the world appeared to establish just how serious the contagion is and how bad it could become if left unchecked.
“Everyone agrees there is a way out of the crisis. It is an uphill way, but it is there,” said Michel Camdessus, head of the 182-member IMF, and World Bank chief James Wolfensohn.
The two organizations are moving to be more open, to improve banking regulation around the world and to provide billions of dollars to financially strapped countries.
Indeed, the Clinton administration last week won support for a $30 billion bailout package for Brazil, perhaps the hottest wireless market in the world today.
All told, the IMF has approved $137 billion in financial assistance during the past year-and-a-half.
The White House was pushing GOP lawmakers, before they adjourned the 105th Congress Friday for midterm elections, to approve $18 billion for the IMF.
At the same time, it still appears U.S. and other world leaders do not have a good handle on how to control the global financial meltdown.
“Today, the world faces perhaps its most serious financial crisis in a half-century,” said President Clinton. “We must take urgent steps to help those who have been hurt by it, to limit the reach of it and to restore growth and confidence.”
Federal Reserve Board Chairman Alan Greenspan last week said the U.S. economy is in good shape, despite the volatile stock market and last week’s free-falling dollar.
“But we are clearly facing a set of forces that should be damping demand going forward … We do not know how far it will go,” said Greenspan.
The Associated Press contributed to this report.
