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Analyst reports: Motorola's estimates cut

Several analysts cut their estimates on Motorola following the company's announcement that its fourth-quarter earnings will fall short of expectations.

    Several analysts cut their estimates on Motorola Thursday, following the company's announcement Wednesday that its fourth-quarter earnings would fall short of expectations.

    U.S. Bancorp Piper Jaffray analyst Samuel May cut his price target to $30 from $53. UBS Warburg's Jeffrey A. Schlesinger cut his target to $36 from $63, and Banc of America Securities analyst Mark McKechnie downgraded the company to "buy" from "strong buy" and cut his price to $40 from $60.

    Shares of Motorola fell 31 cents to $21.13, after dropping $4.94, or 19 percent, Wednesday on volume of 72 million shares, nearly six times its average daily volume.

    In a conference call Wednesday with analysts, Motorola said it expects fourth-quarter earnings of 27 cents a share, down from analyst expectations of 37 cents, according to First Call/Thomson Financial.

    Motorola also reduced its forecasts for handset sales. The company now expects 410 million to 425 million phones to be sold in 2000, and 525 million to 575 million phones to be sold in 2001. Merrill Lynch analyst Michael Ching had forecast 420 million to 440 million phones for 2000, and 580 million to 620 million for 2001.

    "Wireless industry dynamics are changing," Ching wrote in his research note. "Service providers have begun to emphasize better cash-flow management rather than raw subscriber growth. Also, high penetration in certain countries could potentially slow new subscriber additions."

    Analysts also issued bullish reports Thursday on Applied Micro Circuits after the chipmaker said its fiscal second-quarter earnings and sales more than doubled. The company also announced a 2-for-1 stock split.

    Applied Micro announced net income of $23.6 million, or 17 cents a share, up from $9.1 million, or 8 cents, a year earlier. Excluding costs for acquisitions and stock-option taxes, the company had a profit of $35.7 million, or 26 cents a share. Revenue increased to $97 million from $37.9 million.

    Robertson Stephens, Banc of America Securities, Pacific Crest and Frost Securites all reiterated "strong buy" ratings on the company. Merrill Lynch reiterated its "near-term buy" rating, and Goldman Sachs maintained its "recommend" listing.

    "AMCC is one of the few companies able to supply standard, high-speed silicon to makers of optical networking equipment, and it is positioned as one of the only companies that can offer an end-to-end solution," wrote Merrill Lynch analyst Mike Lipacis. "We continue to view AMCC as a core holding for investors who want to play the build-out of the high-speed global telecom network."

    Shares of Applied Micro rose $9.78, or almost 6 percent, to $177.50.

    The five most covered companies Thursday were Applied Micro Circuits (AMCC), Advanced Micro Devices (AMD), Motorola (MOT), Redback Networks (RBAK) and TranSwitch (TXCC), each with six broker reports.