THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, September 12, 1996 TAG: 9609120362
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: 53 lines
Virginians, especially those in the Richmond area, are anxiously awaiting more news about how Motorola Inc.'s disappointing third-quarter profits will affect the company's plans to build manufacturing plants here.
The company on Wednesday blamed weak prices and soft demand for semiconductors for its situation. It also pointed to price wars in cellular phones, paging and modem businesses. International sales of the telecommunications products also have been falling.
Motorola's stock fell more than 7 percent Wednesday after the announcement but later recovered. It closed down $1.37 1/2 to $49.25 on the New York Stock Exchange.
Two of three planned high-tech semiconductor plants in Virginia are being backed by Motorola. One, the West Creek development, is a $3 billion plant in Goochland County, outside Richmond. The other project, White Oak Semiconductor, is a $1.5 billion venture between Motorola and Siemens AG in east Henrico County near Richmond International Airport.
In April, Motorola announced it would delay construction of the Goochland County plant by a year because of slower growth in the chip business.
Motorola officials declined to answer questions Wednesday about whether the lower-than-expected third-quarter earnings will delay its Goochland facility further or affect the Henrico-based project.
``Obviously any project involving capital expenditures must be under continual consideration,'' said Jeff Gorin, a Motorola spokesman. But he declined to say whether Motorola's plans will change.
A spokesman for the Virginia Economic Development Partnership declined to comment.
``If the company hasn't made any statement regarding those two capital investments, we're not going to speculate on that,'' said state spokesman Morgan Stewart.
The third quarter ends on Sept. 28 and results are to be released Oct. 7. The company said they will be ``significantly below'' the second quarter's, defining that as 25 percent lower or more. That translates to about 40 cents a share.
Analysts had been expecting Motorola to report a profit of 50 cents per share, according to a survey by First Call Inc.
In the third quarter of 1995, Motorola had profit of $496 million, or 81 cents a share, on sales of $6.85 billion. Second-quarter 1996 profit was $326 million, or 54 cents, on sales of $6.83 billion.
Gary Tooker, vice chairman and chief executive officer, said the company expects a weaker performance despite cutbacks on work schedules and production and other attempts to reduce expenses.
But, he said, ``we remain confident that the global opportunities for our communications and semiconductor products remain as exciting as ever.'' MEMO: The Associated Press and Bloomberg News Service contributed to
this report. by CNB