Motorola battered as profits slide 16%
MOTOROLA Inc.'s stock was bartered for the second day in a row yesterday, casting a pall on Wall Street, after the communications equipment giant confirmed investors's fears about its shrinking profits.
The stock fell $4.25 to $49.25, (£30.80) at one stage on the New York Stock Exchange, where it was the most active issue at midday. It had dropped $2.625 to, $53.50 on Tuesday amid worries about the company's fourth quarter results, which were announced after the stock market closed.
Motorola's profits fell short of Wall Street expectations, sliding 16 per cent to $432 million from $515 million in the year ago period, even though sales rose to $7.3 billion from $6.5 billion.
Earnings per share dipped to 72 cents from 87 cents, below analysts forecasts of 88 cents.
Compounding market fears, Motorola warned that the next few quarters may be tough as well and told analysts yesterday that it does not expect revenue from its new products until late 1996.
Motorola also said it expects, fixed costs to rise in 1996 amid continued pressure on its profit margins, he said.
Investors, suspecting that technology stocks have been overvalued, took Motorola's woes as an indicator of the health of the sector and embarked on a selling spree which depressed the entire market.