Motorola Announces Third-Quarter Financial Results (Revenue down 15%)

 

 

Highlighted Items

 

 

                                                           EPS Impact
                                                            Exp/(Inc)
    -------------------------------------------------------------------
    Software and silicon platform consolidation
     charge                                                  $(0.11)
    Settlement of Freescale purchase commitment               (0.04)
    Impairment of Sigma Fund investments                      (0.05)
    Asset impairments                                         (0.04)
    Reorganization of business charges                        (0.01)
    Separation-related transaction costs                      (0.01)
    Reversal of tax-related interest accruals                  0.01
    Gain on the sale of PP&E                                   0.01
      Tax-related benefits                                     0.01
                                                             ---------
                                                             $(0.23)
    ------------------------------------------------------------------

 

 

Conference call and webcast

 

Motorola will host its quarterly conference call beginning at 8 a.m., Eastern Time (USA) on Thursday, October 30, 2008. The conference call will be webcast live with audio and slides at www.motorola.com/investor.

 

Definitions

 

* Total cash equals Cash and cash equivalents plus Sigma fund (current and non-current) plus Short-term investments

 

Business Risks

 

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to statements about: 1) cost savings from cost reduction actions; 2) the timeframe for our plans to separate the Company; and 3) Motorola's financial outlook for the fourth quarter and full year of 2008. Motorola cautions the reader that the risk factors below, as well as those on pages 18 through 27 in Item 1A of Motorola's 2007 Annual Report on Form 10-K and in its other SEC filings, could cause Motorola's actual results to differ materially from those estimated or predicted in the forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to: (1) the Company's ability to improve financial performance and increase market share in its Mobile Devices business, particularly in light of anticipated slowing demand in the global handset market; (2) the level of demand for the Company's products, particularly in light of global economic conditions which may lead consumers, businesses and governments to defer purchases in response to tighter credit and negative financial news; (3) the Company's ability to introduce new products and technologies in a timely manner; (4) the possible negative effects on the Company's business operations, financial performance or assets as a result of its plan to create two independent, publicly traded companies; (5) unexpected negative consequences from the Company's ongoing restructuring and cost-reduction activities, including as a result of significant restructuring at the Mobile Devices business; (6) negative impact on the Company's business from the ongoing global financial crisis and severe tightening in the credit markets, which may include: (i) the inability of customers to obtain financing for purchases of the Company's products; (ii) the viability of the Company's suppliers that may no longer have access to necessary financing; (iii) reduced value of investments held by the Company's pension plan and other defined benefit plans; (iv) fair and/or actual value of Company's debt and equity investments could differ significantly from the fair values currently assigned to them, including as a result of additional impairments in the Company's Sigma Fund; (v) counterparty failures negatively impacting the Company's financial position; and (vi) increased cost to the Company to obtain financing; (7) the economic outlook for the telecommunications and broadband industries; (8) the Company's ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (9) risks related to dependence on certain key suppliers; (10) the impact on the Company's performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (11) risks related to the Company's high volume of manufacturing and sales in Asia; (12) the creditworthiness of the Company's customers and distributors, particularly purchasers of large infrastructure systems; (13) variability in income received from licensing the Company's intellectual property to others, as well as expenses incurred when the Company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of the strengthening U.S. dollar on the Company when competing for business in foreign markets; (16) the impact on the Company from continuing hostilities in countries where the Company does business; (17) the impact on the Company from ongoing consolidation in the telecommunications and broadband industries; (18) the impact of changes in governmental policies, laws or regulations; (19) the outcome of currently ongoing and future tax matters; and (20) negative consequences from the Company's outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

 

About Motorola

 

Motorola is known around the world for innovation in communications. The company develops technologies, products and services that make mobile experiences possible. Our portfolio includes communications infrastructure, enterprise mobility solutions, digital set-tops, cable modems, mobile devices and Bluetooth accessories. Motorola is committed to delivering next generation communication solutions to people, businesses and governments. A Fortune 100 company with global presence and impact, Motorola had sales of US $36.6 billion in 2007. For more information about our company, our people and our innovations, please visit www.motorola.com.

 

 

 

 

                                    Motorola,  Inc.  and  Subsidiaries
                        Condensed  Consolidated  Statements  of  Operations
                                (In  millions,  except  per  share  amounts)

                                                                            Three  Months  Ended
                                                                            ------------------
                                                      September  27,      June  28,      September  29,
                                                                      2008              2008                        2007
                                                      -------------    ---------    -------------
        Net  sales                                          $7,480          $8,082                  $8,811
        Costs  of  sales                                  5,677            5,757                    6,306
                                                                      -----            -----                    -----
        Gross  margin                                      1,803            2,325                    2,505
                                                                      -----            -----                    -----

        Selling,  general
          and
          administrative
          expenses                                            1,044            1,115                    1,210
        Research  and
          development
          expenditures                                        999            1,048                    1,100
        Separation-related
          transaction  costs                                21                  20                            -
        Other  charges                                        111                  56                        115
        Intangibles
          amortization  and
          IPR&D                                                        80                  81                          90
                                                                      -----            -----                    -----
        Operating  earnings
          (loss)                                                  (452)                  5                        (10)
                                                                      -----            -----                    -----

        Other  income
          (expense):
              Interest  income
                (expense),  net                                18                (10)                          7
              Gains  on  sales  of
                investments  and
                businesses,  net                                7                  39                            5
              Other                                                (173)              (85)                          6
                                                                      -----            -----                    -----
        Total  other  income
          (expense)                                            (148)              (56)                        18
                                                                      -----            -----                    -----
        Earnings  (loss)  from
          continuing  operations
          before  income  taxes                        (600)              (51)                          8
        Income  tax  benefit                            (203)              (55)                      (32)
                                                                      -----            -----                    -----
        Earnings  (loss)  from
          continuing  operations                    (397)                  4                          40

        Earnings  from
          discontinued
          operations,  net  of
          tax                                                              -                    -                          20

        Net  earnings  (loss)                        $(397)                $4                        $60
                                                                      -----            -----                    -----


        Earnings  (loss)  per
          common  share
        -------------------
            Basic:
                Continuing
                operations                                $(0.18)          $0.00                    $0.02
                Discontinued
                  operations                                        -                    -                      0.01
                                                                      -----            -----                    -----
                                                                    $(0.18)          $0.00                    $0.03
                                                                    ======            =====                    =====

            Diluted:
                Continuing
                operations                                $(0.18)          $0.00                    $0.02
                Discontinued
                  operations                                        -                    -                      0.01
                                                                      -----            -----                      ----
                                                                    $(0.18)          $0.00                    $0.03
                                                                    ======            =====                    =====

        Weighted  average
          common  shares
          outstanding
        ----------------
            Basic                                            2,265.9        2,262.6                2,290.2
            Diluted                                        2,265.9        2,269.5                2,318.4

        Dividends  paid  per
          share                                                  $0.05            $0.05                    $0.05
                                                                      -----            -----                    -----



                                                                                  Percentage  of  Net  Sales*
                                                                                  ------------------------
        Net  sales                                                100%              100%                      100%
        Costs  of  sales                                    75.9%            71.2%                    71.6%
                                                                      -----            -----                    -----
        Gross  margin                                        24.1%            28.8%                    28.4%
                                                                      -----            -----                    -----

        Selling,  general
          and
          administrative
          expenses                                              14.0%            13.8%                    13.7%
        Research  and
          development
          expenditures                                      13.4%            13.0%                    12.5%
        Separation-related
          transaction  costs                              0.3%              0.2%                      0.0%
        Other  charges                                        1.5%              0.7%                      1.3%
        Intangibles
          amortization  and
          IPR&D                                                      1.1%              1.0%                      1.0%
                                                                      -----            -----                    -----
        Operating  earnings
          (loss)                                                  -6.0%              0.1%                    -0.1%
                                                                      -----            -----                    -----

        Other  income
          (expense):
              Interest  income
                (expense),  net                              0.2%            -0.1%                      0.1%
              Gains  on  sales  of
                investments  and
                businesses,  net                            0.1%              0.5%                      0.1%
              Other                                                -2.3%            -1.1%                      0.1%
                                                                      -----            -----                    -----
        Total  other  income
          (expense)                                            -2.0%            -0.7%                      0.2%
                                                                      -----            -----                    -----
        Earnings  (loss)  from
          continuing  operations
          before  income  taxes                        -8.0%            -0.6%                      0.1%
        Income  tax  benefit                            -2.7%            -0.7%                    -0.4%
                                                                      -----            -----                    -----
        Earnings  (loss)  from
          continuing  operations                    -5.3%              0.0%                      0.5%

        Earnings  from
          discontinued
          operations,  net  of
          tax                                                          0.0%              0.0%                      0.2%

        Net  earnings  (loss)                          -5.3%              0.0%                      0.7%
                                                                      -----            -----                    -----

        *  Percents  may  not  add  up  due  to  rounding
 

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