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Motorola Profit Tops Wall Street View
Oct 14, 2003
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Motorola Inc., the world's No. 2 mobile phone maker, posted a quarterly profit that was twice Wall Street estimates due to surprisingly strong demand for its cell phones.

The company also forecast stronger-than-expected sales in its current fourth quarter and said earnings could top analysts estimates.

Analysts were satisfied with the third-quarter results, but were wary about the outlook for the cell phone unit for the fourth quarter -- traditionally the industry's strongest season.

"This is the same company that reported strong (cell-phone order) numbers on the surface last year this time and then managed to come out about a quarter later and say there was too much inventory," said Alex Vallecillo, senior portfolio manager of Armada Funds.

"Guys like me are probably going to take a little bit of a wait and see attitude," added Nr, Vallecillo, who does not own shares in the company but follows it closely.

Moody's analyst Paul Hsi, who had said Motorola faced tough challenges to boost sales and earnings when he cut Motorola's unsecured debt to one notch above junk, said the results and outlook would not change his opinion.

Motorola, which moved up its reporting date by a day after the Moody's downgrade, reported a third-quarter net profit of U.S. $116 million, or $0.5 a share, compared with $111 million, or $0.5 a share, last year.

Excluding one-time items, the Schaumburg, IL, U.S., company posted a profit of $0.6 a share, double what analysts had expected on average according to Reuters Research, a unit of Reuters Group Plc.

Sales for the quarter rose almost 5 percent to $6.83 billion. Analysts had expected $6.44 billion, according to Reuters Research.

"The overall business environment seems to have stabilized and the tax and low interest rate economic stimulus appears to be enhancing the prospect for slow but emerging growth," Motorola Chairman and Chief Executive Christopher Galvin said in a statement.

Mr. Galvin said last month he was resigning due to disagreements over strategy with the board, but will remain until a successor is named. The company also said last week it plans to spin off its money-losing semiconductor unit, a move sought for years by many analysts and investors. (Reuters)

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