Following Tuesday trading, communications company



felt it necessary to publicly spank the Street for being too optimistic about projections. Tomorrow, Motorola is likely to get a spanking of its own from investors.

The cell-phone maker took its first opportunity to outline 2002 projections, which include a shocking 10% year-over-year drop in sales from ongoing operations in 2002, rather than a rebound.

In a press release and in chiding executive comments, Motorola tsk-tsked the Street for overestimating projections for Motorola's coming year. Street consensus estimates had figured on a 4% gain in revenue for Motorola in fiscal 2002 over 2001 and a profit of 16 cents a share, compared with an expected loss of 31 cents a share for the current year.

Stunningly, Motorola management insists that it can still turn a profit in 2002, despite revenue 10% slimmer than this year's grim $30 billion in anticipated revenue.

Management attributed some of the revenue discrepancy between its projections and the Street's to seasonality, which it said analysts have underestimated. Motorola cautioned the Street to expect a double-digit sales decline in the first quarter of 2002 as the seasonally strong fourth quarter for cell-phone sales slows to a lull. Analysts were given failing marks for their expectations of a slim 4% drop in revenue from the holiday quarter to the first quarter.

Director of Investor Relations Ed Gams argued that there's no way first-quarter revenue will drop "only 5% -- that's a much smaller decline than is seasonally normal for Motorola. That is a key place where consensus models have not taken history into account," he said. He added that Motorola has averaged 14% declines in recent years and "that is the situation in which we see ourselves now. We're not in a situation in which there is strong evidence of recovery in technology."

Motorola also announced that it will meet its forecast results of flat to 3% growth in revenue in the fourth quarter of 2001, or $7.4 billion to $7.6 billion in revenue and a loss of 4 cents to 5 cents a share. The Street was expecting $7.5 billion in revenue and a loss of 5 cents a share in the fourth quarter, according to

Investors pushed Motorola's stock down more than 3% to $16.09 in after-hours trading, according to Instinet.

Not surprisingly, analysts on the call were skeptical about Motorola's ability to make it back into the black in 2002 on lower revenue. The mobile giant detailed part of its plan as it added 9,400 more jobs to its list of cuts and said it had eliminated 33,500 positions thus far in 2001.

At the end of the third quarter, Motorola estimated total cuts in 2001 of 39,000 employees, and said by year-end 2002 that would rise to 42,900. Almost half of the newly described layoffs will come in the lagging semiconductor business segment, which Motorola explained was still suffering in the fourth quarter alongside the wireless infrastructure business.

"We had mentioned on the last earning call that the trend next year for infrastructure will be flat to down 10%," explained Ed Breen, executive vice president of the networks business. "We are planning our business and overhead structure around the lower end of that range. If it's not as low as that, it'll be a pleasant surprise."