Motorola Begins Earnings Season With A Thud

The market really needs to find a better company than Motorola to kick off earnings season.

Every quarter, Motorola goes first, and almost every quarter, the company disappoints.

And as a result, the company’s stock seems to spend more time than not in the mid-teens, a level first reached in mid-1993. That’s eight years of underperforming cash.

Motorola is a great institution, with a 73-year history of adapting itself to technological change. And one of these days it will likely catch another wave and produce great returns for investors.

But until then, could we please get another company to kick off earnings season? Maybe IBM could report at the start of the month and Microsoft at the end, to give investors the best possible impression of quarterly earnings reports.

For the record, Motorola did report some good news last night: the handset division returned to profitability a quarter earlier than expected, and is expected to grow on a sequential basis this quarter.

The company met estimates with a 7-cent loss – but that was before a $2 billion, 57-cent charge covering investment impairments, cost-reduction activities and about $1.3 billion in additional reserves relating to a defaulted $2 billion financing to Turkish cellular operator Telsim. And that followed a $500 million charge last quarter. The company lowered fourth quarter estimates.

The company’s semiconductor segment was weak, but officials said the company may have reached a bottom in that sector. However, they also pushed out the timetable for a recovery to mid-2002 from the first quarter, and lowered growth estimates.

Unprofitable Motorola looks expensive on a price-to-earnings basis, but on a price-to-sales and price-to-book basis, the company is relatively cheap, with a price-to-sales ratio of 0.80 and a price-to-book ratio of 1.73.

Now if only the company could turn its semiconductor business around.