"When talking about SARS, we obviously can't control that," Devonshire told a packed conference room at the Waldorf Astoria. "When we put together our forecast for the second quarter based on first quarter results, there's no question that were aware of it in a much more intense market in China. In the last weeks at the end of the first quarter, SARS began to hit, but SARS is and still continues to be, in effect a trend, and of course we're very big in China."

Motorola's original results call for $6.4 billion to $6.6 billion in sales in Q2, up from Q1's $6 billion and a full-year guidance of $27.5 billion to $28 billion in sales, up 1 percent to 3 percent from 2002.

"Our supply chain in China is virtually unaffected, but clearly the consumers themselves are not in the malls, they are not out buying," the CFO said. "So I'm here to tell you that at the after two months we always take a good hard look at where we are and what we can control, but we can't give 100 percent assurance that SARS is not going to have some impact on our results. We will continue to monitor this very closely, as we have, and update you on the second quarter."

Devonshire gave no new numbers at today's event, but said that among the company's 2003 goals are profitable growth and an increased investment in its brand. Motorola has no scheduled date for any Q2 guidance update.

"We knew about SARS and had built in an estimate in our second quarter forecast, but this is something that is out of our control and we're just putting a heads-up out there that we can control what we can control. We're certainly doing everything we possibly can to control costs," he said, noting that the company has done other things, including accelerating product releases, to ward off any SARS repercussions.

"In China itself, we've also accelerated the adoption of focusing on our distribution on tier three, tier four cities to help growth there, as well, to help offset what's been going on, not only from a competitive standpoint but also from a SARS perspective."

In early May, Motorola closed its Beijing office for a week on a SARS scare, asking the facility's 1,000 employees to work from home. At last report, the office was reopened and the ill employee has completed a home quarantine period free of the mystery virus.

Motorola's stock closed today at $8.48 today, down less than 1 percent from Monday's close.

By: DocMemory
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