Mike Zafirovski is excited about the mobile-phone market, but not enough to get ahead of himself.
-groomed leader of Motorola's Personal Communications Segment spoke at the Lehman Brothers Telecom Conference in Florida this afternoon, projecting his enthusiasm but not too many enthusiastic numbers. Zafirovski forecast 2002 industrywide mobile-phone sales of 420 million to 460 million, building on a dreary 2001 shipments of less than 400 million.
That represents a slight increase in the high-end numbers from the estimate Motorola gave in October. If the market continues as it has for the past few months, Zafirovski argues that the number would "more likely be 420 million," pinning mobile-phone success to worldwide economics. If national financial fortunes pick up, he would "not be surprised to do 460 million." Zafirovski predicts the market will ship 105 million to 108 million phones in the current quarter.
That was all the soothsaying the Motorola executive was prepared to do. Instead, he focused on the Personal Communications Segment's past and its progress from the past nine months. The PCS group seized an additional 3% market share in 2001 to get to the 17% to 18% level at the end of the third quarter of 2001, which Zafirovski believes Motorola can maintain or build upon in the fourth quarter. The segment has shed 14,000 employees to get down to the 19,000 level, and trimmed its component and mobile-phone families for a total savings of $1 billion this year. Nonetheless, Motorola was down more than 3% to $17.30 in Thursday trading after the Motorola presentation.
Motorola had nothing to add by way of fourth-quarter guidance. One clue to Motorola's revenue could come from Zafirovski's insistence that Motorola would get a "positive impact" from the $3.3 billion backlog it reported in its third-quarter results, which was a 9% sequential improvement in that number and a 22% jump from a rough third quarter in 2000.
Zafirovski said he expects average selling prices of phones to be flat in 2002 from 2001, despite the new, higher-priced models with data capabilities entering the market. Motorola was criticized in the second quarter for padding its market share by selling end-of-life phones in the Chinese market. The company increased its price per phone 14% in the third quarter when it began to run out of the cheaper phones. Additionally, the PCS chief said he expects his group to be profitable in 2002.
In October, Motorola forecast fourth-quarter revenue with flat to 3% growth over the third quarter's $7.4 billion finish. Wall Street expects Motorola to wallow at the low end of that guidance, according to Multex.com, with modest improvement to $7.5 billion in revenue. Motorola predicted it would lose 4 cents to 5 cents in the fourth quarter, and analyst consensus leans toward the more bleak outlook of 5 cents.