BREAKFAST WITH THE FOOL
Wednesday, October 13, 1999
"Everyone is ignorant, only on different subjects."
-- Will Rogers
Results of Restructuring Taking Hold at Motorola
Richard McCaffery (TMF Gibson)
The difference a year makes.
Communications and semiconductor company Motorola (NYSE: MOT) reported earnings (excluding special items) of $0.53 per share on net income of $332 million last night due to strong sales of digital wireless phones and a year-long restructuring effort.
Sales this quarter reached $7.7 billion, up 7% from $7.2 billion a year ago.
Included in the special items was a $994 million charge for Iridium (Nasdaq: IRIQE), the company's $5 billion satellite telephone venture that's currently working to restructure its debt under bankruptcy protection. Including special charges, Motorola reported income of $91 million and earnings of $0.14 per share, compared to $27 million and $0.04 per share a year ago.
That nastiness aside, Motorola's Q3 results were good enough to meet analyst estimates and a far cry from the manufacturer's sad third quarter a year ago. Last year's struggles were, in part, the result of the Asian crisis, which led to a major corporate restructuring that included consolidation and the sale of poorly performing businesses. In 1998, Motorola reported a loss of $962 million on sales of $29.4 billion, a 1.3% decline.
Motorola's future lies in personal communications and embedded electronics. The company showed nice growth in these areas. Sales of digital wireless products surged this quarter, with growth especially strong for Global System for Mobile (GSM) communications devices in Europe and Code Division Multiple Access (CDMA) devices in Asia, the U.S., Canada, and Latin America. Operating profit for the Personal Communications Division soared to $140 million, up from $55 million a year ago.
Motorola's big play this quarter was its move to buy General Instrument (NYSE: GIC), a leading manufacturer in the field of cable set-top boxes and broadband communications equipment. The $11 billion stock merger should give Motorola momentum in the race to provide consumers and corporations with broadband products as the communications market converges.
News to Go
Television broadcaster, plastic film manufacturer, and healthcare product distribution company Chris-Craft (NYSE: CCN) is considering selling some or all of its 10 television stations to companies including CBS (NYSE: CBS) and News Corp. (NYSE: NWS), The Wall Street Journal reported.
Enterprise software market leader SAP (NYSE: SAP) said sales this year will grow between 15% and 20%, down from an earlier forecast of 20%, because companies are delaying large software purchases until after the year 2000.
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