Motorola Inc continues to be hit very hard by the price collapse in the memory markets. The Schaumberg, Illinois electronics giant reported third quarter figures even worse than it had predicted less than a month ago (CI No 2,997). And there’s more to come as the company warned more job losses and other cost-cutting measures will be announced some time this quarter and will hit fourth quarter earnings. The bottom falling out of memory prices, which started about a year ago was the main factor, but also price squeezes in the cellular telephone, pager and modem markets, as well as related products such as rechargeable batteries and the like. What the company failed to mention in its profits warning was that the third quarter last year was boosted by a substantial net gain from the sale of assets. Going through the businesses, semiconductor products was obviously the main culprit, with sales down 19% to $1.8bn and a break-even result at the operating level, with orders down a startling 33% across all regions. General systems sales fell 2% to $2.6bn with orders up 13% and operating profits lower. The automotive, energy and controls group saw sales decline 13%, orders a point more and operating profits slide. On the up side, the messaging, information and media sector saw sales climb 8% to $1.0bn, but orders still fell 2% and operating profits were lower because of the gain last year, mentioned earlier. The land mobile products sector’s sales were up 2% at $929m, orders climbed 18% and operating profits actually rose. The space and systems technology group saw sales 3% higher as orders went into orbit due to a delayed order from the Motorola-led Iridium LLC satellite communications system, and it made a profit at the operating level. But Iridium’s satellite deployment phase and depreciation will hit Motorola’s future numbers, the company warned. A quarter of Iridium’s figures are included in Motorola’s. Expense increases in the flat panel display business will further impact numbers in 1997 and vice chairman and COO Gary Tooker predicted a modest recovery in the semiconductor industry in 1997.
