Motorola Inc Chief Executive Officer Christopher Galvin has vowed to end a string of losses at the world's No. 2 mobile-phone maker. Some investors say he may have the ingredients for a rebound: new phones, a smaller workforce and able lieutenants.
"There do seem to be some real catalysts coming," said Naima Hoque, telecommunications analyst at FleetBoston Financial Corp's Columbia Management Group, which manages US$170 billion and owns 2.97 million Motorola shares.
Galvin intends a return to profit, excluding severance and other costs, by the third quarter and for the year. He hasn't said when the company will report net income.
Motorola, which is expected to announce a fifth straight loss, overestimated last year's sales by US$15 billion, leading to its first annual loss excluding reorganization costs in 71 years. With an industrywide rebound in demand for cellphones and chips predicted by analysts, Galvin won't be able to afford missteps.
Past stumbles such as the Iridium satellite venture, which reduced earnings by US$1 billion, and falling behind Nokia Oyj as the world's biggest seller of cellphones contributed to a plunge in the stock.
"The question is, `You're turning a big ship. How long will it take?' This could turn out be the same Motorola," Hoque said.
The Schaumburg, Illinois-based company's shares have fallen to US$13.66 from a high of US$61.54 in March 2000. The stock has lost a third of its value since Galvin, 52, became CEO in January 1997, wiping out US$5.3 billion in market value.
The shares fell 5.5 percent in the latest quarter. Galvin declined to be interviewed, spokeswoman Jennifer Weyrauch said.
"We find our financial performance as unacceptable as our stockholders do," Galvin said last month. "We enter 2002 as a leaner, more agile, more focused and more fiscally sound company."
Motorola expects a 2002 loss after all expenses, following a US$3.94 billion loss last year. The company reduced the workforce by a quarter, to 111,000, as sales fell 20 percent to US$30 billion. It plans to cut 11,000 more employees this year.
Analysts expect the company to report a first-quarter loss of US$0.12 a share, excluding severance costs and writedowns.
Motorola forecasts first-quarter sales of US$6 billion to US$6.1 billion, the lowest in seven years and down from US$7.68 billion a year earlier.
Motorola denied bonuses to Galvin and other executives last year, resulting in a 48 percent decline in Galvin's cash pay and benefits to US$1.3 million.
Some investors said their confidence in management has increased in recent months because Motorola introduced stylish new phones that may help regain sales; two Galvin deputies, President Edward Breen, 46, and cell-phone unit head Mike Zafirovski, 48, have stressed spending controls; and the company has shed jobs and closed plants, particularly in the semiconductor unit.
"If the overall market does start to pick up and they still haven't gotten their act together by the end of this the year, I think people would be disappointed," said Giri Devulapally, a fund manager at T. Rowe Price Group Inc, which manages US$156.3 billion and owned 9.43 million Motorola shares Dec. 31.
Since the fourth quarter of 2000, Motorola has said nine times that results will lag analyst forecasts. That led many investors to sour on Galvin, the grandson of company founder Paul Galvin, and turn to Breen and Zafirovski for hope.
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