Motorola Profit Rises Just 10%, Before Charges

Motorola Inc. on Monday said fourth-quarter profit before charges rose 10%, less than analysts expected, amid declining pager sales and slowing orders of its cellular phone products and services in Asia.

The world’s largest maker of cellular phones said profit before charges rose to $393 million, or 65 cents a diluted share, from $357 million, or 59 cents, in the year-earlier period. Sales rose 7.7% to $8.28 billion from $7.69 billion.

Motorola was expected to earn 68 cents a diluted share, the average estimate of analysts.

Deteriorating economic conditions in Asian markets slowed the growth of sales and orders and profit, the company said. Though demand for Motorola’s wireless phones and network equipment has been strong, paging revenue fell 3% in the quarter. Motorola said it didn’t expect the paging market to improve until this year.

“We are still facing challenges in the near-term,” said Chief Executive Christopher Galvin. “We expect the economic conditions in certain markets in Asia that affected fourth-quarter results to continue for at least the first half of 1998.”

As a result, Galvin said sales growth in the first and second quarters of 1998 will be about 10%, compared with year-earlier sales.

Motorola previously warned of slower sales growth in the fourth quarter and said it may take pretax charges of as much as $100 million as it considers exiting businesses that aren’t meeting financial targets.

Motorola also forecast stronger sales of wireless equipment and semiconductors this year, and investors are expected to pay close attention to the company’s computer chip sales in Asia in light of the region’s recent economic crisis. Motorola’s 1998 estimates are likely to come down because of Asia, analysts said.

In the last month, three analysts have lowered their fourth-quarter earnings estimates, bringing the average estimate down 0.7%.

Motorola said charges totaling $72 million, or 12 cents a share, resulted in net income of $321 million, or 53 cents a diluted share. In the year-ago quarter, charges of $119 million, or 20 cents a share, brought net income to $238 million, or 39 cents.

Shares of the Schaumburg, Ill.-based company fell $1 to $54.50 in New York Stock Exchange trading. Earnings were announced after the close of trading. Since hitting a 52-week high of $90.50 on July 16, Motorola shares have plunged 40% to a 52-week low of $53.88 earlier Monday.

U.S. companies now report earnings per share two ways: diluted, which reflects options, warrants and other securities convertible into common stock; and basic, which doesn’t reflect them. Motorola’s basic earnings per share rose to 54 cents in the fourth quarter from 40 cents a year ago.

NationsBank Corp.’s fourth-quarter earnings rose 29% as its Boatmen’s Bancshares Inc. and Montgomery Securities Inc. acquisitions boosted loans and fees.

The Charlotte, N.C.-based bank’s fourth-quarter net income rose to $818 million, or $1.12 a diluted share, from $632 million, or $1.07, in the year-earlier period. That matched analysts’ expectations. Per-share results reflect a 24% rise in diluted shares outstanding from the end of 1996.

Earnings matched the average forecast of analysts. NationsBank shares fell 94 cents to close at $58.06 on the NYSE.