Motorola 2002 Annual Report Download - page 40

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MOTOROLA TELEPHONY SERVER (GSM / UMTS)
38 Motorola, Inc.
MOTOROLA NODE B BASE TRANSCEIVER STATION (UMTS)
GLOBAL
TELECOM
SOLUTIONS
SEGMENT
Want to check e-mail on your wireless handset?
Access a Web site? Download an application?
Essentially, recreate your office on the move?
These are all capabilities supported by the infra-
structure of the wireless network. We are a key
provider of wireless infrastructure systems that
are used in every part of the world. We’re behind
the scenes, helping your wireless operator put
voice, data and images at your fingertips. The
tricky part is making the new technology work with
the old, so operators can keep expanding your
options without starting from scratch every time.
We develop, manufacture and market the newest
generation of base stations and equipment for
wireless networks. We also provide the services
and software that help operators improve perfor-
mance and expand use of their existing netw orks.
After many years of strong growth, the wireless
infrastructure industry experienced a second con-
secutive year of decline in 2002. The decline in
industry sales was the result of a continuing steep
decline in capital expenditures by w ireless service
providers in all regions of the world, as service
providers continued to lower their cost structures
to improve cash flow and reduce their significant
debt levels.
For 2002, sales for the Global Telecom Solutions
Segment (GTSS) were $4.5 billion, compared to $6.4
billion in 2001. The reduction in sales reflects the
weak industry climate. Presented on a GAAP basis,
the segment reported a 2002 operating loss of $621
million versus an operating loss of $1.4 billion in
2001. Excluding special items, GTSS reported an
operating loss of $11 million, compared with operat-
ing earnings of $32 million a year ago. Despite the
$1.9 billion decline in sales, operating earnings,
excluding special items, declined by only $43 million
as the segment improved its gross margin and
dramatically lowered its cost structure.
In 2003 we expect to face another declining
market. We intend to aggressively respond to this
market reality with compelling products, new ser-
vices and further improvement to our cost structure.