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Analysts anxiously await Motorola earnings

Slumping handset sales, semiconductor weakness and a double shot of warnings give analysts little to cheer about ahead of the company's fourth-quarter earnings.

Slumping handset sales, semiconductor weakness and a double shot of warnings are giving analysts little to cheer about ahead of Motorola's fourth-quarter earnings.

Motorola will release its financial results after the market closes Wednesday. The wireless phone maker, which twice has warned for the quarter, is now expected to report reduced earnings of 15 cents a share after the closing bell, down from 26 cents a year earlier, according to earnings tracker First Call.

Analysts originally had forecast a profit of 37 cents a share. Shares started Wednesday's session down 63 cents, or 3 percent, to $20.06.

Hope on the far horizon?
For analysts, there seems little reason to expect the Schaumberg, Ill.-based company to release any positive news.

In a research note, Wit SoundView analyst Matt Hoffman said that the focus of the earnings release would be on Motorola's 2001 outlook, as the company currently has no official guidance for that period.

Although he has a "buy" rating on the company's stock, Hoffman said he is only recommending the stock to the "longest of long-term investors," who are willing to wait out the current end-market weakness.

Another key topic will be Motorola's guidance for each half of 2001. In general, analysts are expecting a rough first half of 2001 with hopes of a rebound in the second half. Wall Street will also be listening closely to gauge where Motorola stands with its products.

"The call will be extremely important as we seek to establish whether Motorola is not competitive in a healthy market, or is losing share in an unhealthy one," Hoffman wrote.

No help from Nokia
One of Hoffman's questions became clearer after Tuesday's announcement from competitor Nokia. The mobile phone giant was hit hard Tuesday after releasing sales figures that were well short of analyst estimates. The company blamed a softening handset market.

Regarding Motorola's mobile infrastructure and broadband businesses, Hoffman said he expects both segments to continue to be profitable, but warned that any weakness in either sector would have profoundly negative implications for the stock.

The analyst also highlighted previously announced management changes at Motorola as issues to watch. According to Hoffman, key financing decisions may be slower at the company than at competitors Ericsson and Nokia.

Analyst Vivian Mamelak at Arnhold & S. Bleichroeder opined in a research note that Motorola's outlook isn't going to be pretty.

Motorola's guidance of handset sales of 525 million to 575 million for 2001 will be revised, the analyst said, adding that even the low end of this range may be aggressive for 2001.

The company's semicondutor growth numbers should also be cut, Mamelak said.