Motorola Inc, the No. 2 mobile-phone maker, may have a larger-than-expected loss in the second quarter because semiconductor sales have probably fallen more than previously forecast, analysts said.
Analysts polled by First Call/Thomson Financial, on average, expect a loss of US$0.12 a share, excluding acquisition expenses and other charges and gains. Analysts said Motorola is likely to lose more than US$0.12 a share. In the company's last forecast on April 11, it said the loss would be a "few cents per share" greater than the first quarter's US$0.09 a share, spokesman Scott Wyman said.
Motorola is suffering from a deepening slump in demand for its chips used in products such as telecommunications equipment and mobile phones, analysts said. Nokia Oyj, the largest cellular-phone maker, lowered its second-quarter targets on June 12, further evidence that Motorola's quarter and second half also may turn out worse than expected, analysts said.
"Actually, it would be surprising to me if Motorola did not bring down expectations again," said First Union Securities analyst Mark Roberts, who rates the stock a "neutral" and said Motorola likely will miss his loss estimate of US$0.11 a share.
Even though Motorola hasn't changed its forecast since the Schaumburg, Illinois-based company reported first-quarter results in April, that isn't necessarily a sign that business didn't deteriorate more than investors anticipated, analysts said.
"The industry has changed since they reported last," said analyst Jeffrey Schlesinger of UBS Warburg, who rates Motorola shares a "buy" and expects a loss of US$0.14 a share. "A number of end markets has gotten tougher." Motorola's Wyman declined to comment on whether the company's business outlook has changed since the April report.
Schlesinger forecasts semiconductor sales of US$1.2 billion in the quarter and total revenue of US$7.84 billion. That's a 40 percent decline in chip sales and a 2.4 percent drop in overall revenue from the year-earlier period.
Motorola Chief Executive Christopher Galvin has been eliminating jobs and reducing costs to try to reverse what will likely be the company's second straight quarterly operating loss, following the first in 15 years.
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