Blaming SARS as well as weak sales, Motorola has been lowering its expectations. It would be interesting to know the relative importance of the two factors. My feeling is that SARS can be used as a scapegoat for a multitude of sins, and the tech 'recovery' may not be as pronounced as Wall Street has been anticipating. Also of note the reduced expectations on semi-conductors sales 2003 and 2004.
Motorola lowered sales and earnings expectations for the second quarter as handsets and semiconductors in Asia suffered the combined effect of Sars and excess inventory, pushing its shares down 5 per cent during morning trade in NewYork. The US technology group said on Monday sales for the second quarter were now expected to be between $6bn and $6.2bn, down from previous guidance of between $6.4bn and $6.6bn. Earnings per share, excluding special items, are expected to be around the breakeven point, down from estimates of between 3 cents and 5 cents. Motorola said full-year sales and earnings guidance would also be lowered as factors affecting the second quarter were likely to hit the third and possibly even the fourth quarter. Although it was confident that Asian health authorities would bring SARS under control, the company said timing of this remained uncertain. Last week, World Semiconductor Trade Statistics cut estimates for global semiconductor sales in 2003 and 2004. The industry group said the long-awaited recovery in the sector was being slowed by the outbreak of Sars.Nokia, which dominates the global mobile handset market, is due to issue its mid quarter update on Tuesday.
Source: Financial Times