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.