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Motorola Posts $449M Q1 Loss; Shuts Chicago Unit

Blaming sluggish sales in its semiconductor and telco infrastructure divisions for a fifth consecutive quarterly loss, number two cell phone manufacturer Motorola said it would shut down one of its Chicago distribution centers within a year, a cost-cutting measure eliminates 850 jobs.

The Schaumburg, IL-based company said net losses in the fiscal first quarter reached $449 million (20 cents per share), narrower than the same year-ago figure of $533 million, or 24 cents a share. In addition to reduced sales in the semiconductior and telecommunications infrastructure units, Motorola also reported reduced revenues from its mobile phone unit.

With revenues dipping to $6 billion in the quarter, a 22 percent decline from last year's $7.68 billion, the company said it would move quickly to stem the flow of red ink with the distribution center in Harvard, Northwest Chicago, being the first casualty.

In addition to the 850 jobs eliminated, Motorola said 400 workers would be transfered to other sites.

Despite the difficulties Motorola CEO Christopher Galvin said the company was aiming for profitability during the second half of 2002.

"These are challenging and turbulent markets worldwide and economic and political volatility makes predictions uncertain. Still, we continue to believe Motorola will return to profitability during the second half of 2002 and be profitable for the full year, excluding special items and barring any unforeseen political or economic disruptions," Galvin said in a statement.

Most of the Motorola's major business arms felt the crunch of the contracting telecommunications sector. Orders in the Personal Communications Segment (cell phones, pagers and two-way radios) fell 11 percent to $2.5 billion while sales reached $2.3 billion, a 1 percent increase.

It said sales in the Semiconductor Products Segment dipped to $1.1 billion, a 22 percent drop even as orders increased 18 percent to $1.3 billion. Excluding items, the chip unit posted an operating loss of $226 million, up from the same year-ago period when it recorded a $95 million loss.

In the wireless infrastructure unit (Global Telecom Solutions Segment), Motorola said sales fell 36 percent to $1.1 billion while orders in the quarter totaled $1.3 billion, a 17 percent decline.