Motorola Inc, the giant US manufacturer of semiconductors and telecommunications equipment, said a lower profits forecast (CI No 3,362) was the result of rival (mainly Japanese) manufacturers saturating other geographical areas in order to alleviate their excess capacity problems following slack demand in Asian markets. But the company would give no details on whether demand or pricing had been the chief culprit, hinting only that it was a mixture of the two and strenuously denying that it was loosing market share. Attempting to clarify the circumstances of its surprise first quarter profits warning, which rocked world stock markets, the company said it would be cutting back capital expenditure to adjust for weak demand but added that it did not expect one off charges in the current quarter to March. The news comes just 24 hours after the semiconductor industry’s biggest player, Intel Corp, released its own profits warning on the back of slack demand for PCs, causing jitters all through the high tech industry about a general slow down. Semiconductor demand was the principle, but not the only reason for MotorolaÆs shortfall in profits, which the company initially said would be well below expectations, and subsequently clarified as being around 25% below forecasts. Revenues would fall short of current expectations by around $600m it said, remaining flat when compared to last yearÆs first quarter of $6.6bn. The Cellular Subscriber sector was second on Motorola’s list of underachievers, with sales of mobile analog hand sets declining much faster than anticipated. Conversely, sales of digital units were seasonally very strong. But the company refused to detail the split between analog and digital handset sales before the first quarter results are published. Looking beyond the current quarter, Motorola said its previous forecast of 10% growth for the year was no longer realistic. Semiconductor revenue growth would be in the single digits for the year, it said.
