At a time when technology stocks are under pressure because of fears that strong earnings can't be sustained, bellwether Motorola Inc. is reporting a surprising 15 percent decline in fourth-quarter earnings.
There were predictions the disappointing results would aggravate a selloff of technology stocks, although the shares were mixed on Wednesday.On Tuesday, Motorola shares skidded $10.621/2 to $45.621/2 on New York Stock Exchange, and other tech issues followed, but Motorola rebounded Wednesday morning, gaining back about $2.
The company blamed declining cellular phones sales and a price war for the drop in profit despite rising revenue. Other cellular phone shares declined Wednesday.
Motorola, the world's largest producer of cellular phones, said it earned $432 million, or 72 cents a share, in the final three months of 1995. That is down from $515 million, or 86 cents, during the same 1994 period.
The company reported sales were up 13 percent to $7.3 billion from $6.5 billion a year earlier.
Several brokerages downgraded their ratings on Motorola stock
"It's obviously a disappointment and by a fairly large margin," said Jim McIlree, an analyst in Chicago with Duff & Phelps.
Nonetheless, bargain hunters snapped up Motorola shares anyway on Wednesday.
Motorola's chief executive, Christopher Galvin, said the poor showing partly results from a large build-up of cellular phone inventories a year ago, continued price-cutting and the high costs associated with new technologies.
The company said sales of cellular phones declined 5 percent in the final quarter compared with the fourth quarter of 1994. Spokesman George Grimsrud would not supply total sales figures.