Motorola chip orders up 30% sequentially, loss cut to $238 million

SCHAUMBURG, Ill. -- Motorola Inc. today reported semiconductor orders sequentially grew 30% to $1.3 billion in the first quarter and the company's chip business continued to narrow its operating losses to $226 million in the period from a loss of $335 million in Q4 of 2001.

Motorola's Semiconductor Products Sector had revenues of $1.09 billion, a 2.7% sequential drop from $1.23 billion in the fourth quarter last year. Compared to a year ago, Motorola's chip sales were 26% below $1.48 billion in Q1 of 2001.

Counting communications systems and other business, the Schaumburg-based corporation reported sales of $6.0 billion in the first quarter, compared to $7.3 billion in Q4 of 2001. Motorola incurred a net loss of $174 million vs. a $1.2 billion net loss in the fourth quarter last year, including charges.

"We are making solid progress in repositioning Motorola to return to profitability in the second half of this year as our end markets recover," said Edward Breen, president and chief operating officer of Motorola. "We have demonstrated the ability to lower our break-even sales level, which is now reduced by more than 20% from its peak in 2000."

He said the corporation generated operating cash flow of about $150 million "on top of the $2.0 billion generated for the full year 2001."

Motorola's Austin, Tex.-based semiconductor unit had an operating loss--excluding special items--of $226 million vs. a loss of $95 million in the first quarter of last year. Counting $12 million in charges, Motorola's total semiconductor loss in the first quarter was $238 million vs. $850 million in Q4, including $515 million in charges.

The company said its recently announced five-year joint-development alliance with Philips Semiconductors and STMicroelectronics (see April 12 story) will significantly reduce the cost of advanced technologies for next-generation ICs.

The company said the initial savings from the development alliance are anticipated in late 2003 and are eventually expected to reduce the cost of maintaining leading-edge chip technologies by two thirds. The three companies plan to jointly spend $1.4 billion in the development alliance by 2005.