Sales for the fourth quarter, ending Dec. 31, are now expected to be $10 billion, with earnings of 15 cents a share, the company said. In October, Motorola had predicted sales of $10.5 billion and earnings of 27 cents a share, a dime lower than the original consensus expectation of 37 cents per share. It also lowered its guidance for 2000 and 2001 at that time.
In heavy early morning trading, shares of the cell phone and semiconductor maker were down $1.56, or more than 8 percent, to $16.25.
Motorola also expects fourth-quarter charges to cover third-quarter cost cuts. More restructuring moves are expected in the first quarter.
The Schaumburg, Ill.-based company said its personal communications unit, which makes wireless phones, hasn't been as profitable as expected. The company said it also hasn't achieved cost reductions in wireless phone production.
Motorola added that a slowdown in the semiconductor industry is denting the sales and operating profits for its chip unit. Chipmakers have recently issued profit warnings, citing inventory corrections. Motorola said inventory adjustments by semiconductor customers should be completed by the middle of 2001.
The company also lowered projections for the first quarter of 2001. Sales in the first quarter of 2001 are currently expected to be $8.8 billion and earnings per share to be 12 cents, excluding special items.
For fiscal 2001, Motorola didn't rule out cutting targets again when it announces final results for the current year. In October, the company said it expected 2001 sales of $44 billion and earnings per share of $1.20.
On the bright side, Motorola reassured investors that it expects robust growth in the global wireless telephone market, with unit sales in the range of 525 million to 575 million in 2001, up from an estimated 420 million units this year. The company also said that the positive effects of cost reductions in its wireless telephone business will be felt by mid-2001.