Motorola sees 2001 mobile, chip market growth slower than 2000
Motorola Inc warned that growth in most of its key market sectors will slow in 2001 from the pace seen in 2000, with particular disappointment due in mobile handsets and semiconductors.
In a conference call to discuss its fourth quarter and year-end results, president and chief operating officer Bob Growney said that the uncertain economic climate in the U.S. and abroad means the company does not feel confident about giving financial guidance for the full year.
However, in first quarter guidance, Growney said that the personal communications sector (PCS) and semiconductors are likely to disappoint in financial terms in the first quarter.
For personal communications, the company said that global mobile handset sales in 2001 overall will come in at the "low end" of the stated range of 510-525 million units, following 410 million unit sales worldwide in 2000.
Mike Zafirovski, president of the personal communications sector, admitted that the onset of demand for low-end phones in the last year had caught Motorola unawares, impacting sales growth. Motorola's concentration on WAP-enabled phones - services for which proved to be much less attractive than expected - was a major contributing factor, he said.
While the product mix will change to accommodate these market shifts in 2001, he said, the first quarter will see both sales and operating margins fall year-on-year and sequentially. Outsourcing will increase, leading to 2,600 job cuts in the sector in the first quarter, he said.
He said that there is little likelihood of material financial improvement in the sector in the first half of 2001, although improvement should be seen thereafter.
As for semiconductors, Motorola said that the growth in worldwide semiconductor sales in 2001 is likely to slip to 10-15%, compared with previous projections - from Motorola and other sources - of about 20-25%.
Sales and operating margins for the first quarter are also likely to be down year-on-year and sequentially, the company said. In 2000, sales had peaked in the third quarter, and then declined because of inventory oversupply - a situation likely to persist into 2001.
On the other hand, the broadband communications sector saw a record performance in 2000, and promises to continue to perform well in the first quarter of 2001.
There was a 52% growth in sales year-on-year in the fourth quarter to $1.053 billion, with operating profit up to $156 million from 95 million.
Despite an end-of-year softness in the U.S. cable market, the company said, strong international performance should see sales and operating margins in the first quarter of 2001 improving both sequentially and year-on-year, it said.
