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MOT » Topics » Item 1A. Risk Factors

This excerpt taken from the MOT 10-Q filed May 6, 2009.
Item 1A. Risk Factors
 
The reader should carefully consider, in connection with the other information in this report, the factors discussed in Part I, “Item 1A: Risk Factors” on pages 18 through 30 of the Company’s 2008 Annual Report on Form 10-K. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere.


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This excerpt taken from the MOT 10-Q filed Oct 30, 2008.
Item 1A. Risk Factors
 
The reader should carefully consider, in connection with the other information in this report, the factors discussed in Part I, “Item 1A: Risk Factors” on pages 18 through 27 of the Company’s 2007 Annual Report on Form 10-K. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere. In addition to the factors included in the Form 10-K, the reader should also consider the following risk factors:
 
We face a number of risks related to the recent financial crisis and severe tightening in the global credit markets.


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The ongoing global financial crisis affecting the banking system and financial markets has resulted in a severe tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in credit and equity markets. This financial crisis could impact Motorola’s business in a number of ways, including:
 
  •  Potential Deferment of Purchases and Orders by Customers: Uncertainty about current and future global economic conditions may cause consumers, businesses and governments to defer purchases in response to tighter credit, decreased cash availability and declining consumer confidence. Accordingly, future demand for our products could differ materially from our current expectations.
 
  •  Customers’ Inability to Obtain Financing to Make Purchases from Motorola and/or Maintain Their Business: Some of our customers require substantial financing in order to fund their operations and make purchases from Motorola. The inability of these customers to obtain sufficient credit to finance purchases of our products and meet their payment obligations to us could adversely impact our financial results. In addition, if the financial crisis results in insolvencies for our customers, it could adversely impact our financial results.
 
  •  Negative Impact from Increased Financial Pressures on Third-Party Dealers, Distributors and Retailers: A number of our businesses make sales in certain regions through third-party dealers, distributors and retailers. Although many of these third parties have significant operations and maintain access to available credit, others are smaller and more likely to be impacted by the significant decrease in available credit that has resulted from the current financial crisis. If credit pressures or other financial difficulties result in insolvency for these third parties and Motorola is unable to successfully transition these end customers to purchase our products from other third parties, or from us directly, it could adversely impact our financial results.
 
  •  Negative Impact from Increased Financial Pressures on Key Suppliers: Our ability to meet customers’ demands depends, in part, on our ability to obtain timely and adequate delivery of quality materials, parts and components from our suppliers. Certain of our components are available only from a single source or limited sources. If certain key suppliers were to become capacity constrained or insolvent as a result of the financial crisis, it could result in a reduction or interruption in supplies or a significant increase in the price of supplies and adversely impact our financial results. In addition, credit constraints at key suppliers could result in accelerated payment of accounts payable by Motorola, impacting our cash flow.
 
  •  Increased Requests by Customers for Vendor Financing by Motorola: Certain of the Company’s customers, particularly, but not limited to, those who purchase large infrastructure systems, request that their suppliers provide financing in connection with equipment purchases. In response to the recent tightening in the credit markets, these types of requests continue to increase in volume and scope. Although Motorola has not increased its commitments to provide financing in light of these requests, a continuation of the current credit crisis could force Motorola to choose between increasing its level of vendor financing or potentially losing sales to these customers.
 
  •  Increased Risk of Losses or Impairment Charges Related to Debt Securities and Equity and Other Investments Held by Motorola: The current volatility in the financial markets and overall economic uncertainty increases the risk that the actual amounts realized in the future on our debt and equity investments will differ significantly from the fair values currently assigned to them. In the last year, Motorola has recognized $163 million of other-than-temporary impairments on debt securities held in its Sigma Fund, a fund that is designed to perform similar to a money market fund and in which Motorola invests most of its U.S. dollar-denominated cash. Although the Sigma Fund is a broadly diversified portfolio of highly rated, short-duration debt securities, there can be no assurance that the Company will not be required to recognize additional impairments in the future. Also, many of the Company’s equity investments are in early-stage technology companies and, therefore, may be particularly subject to substantial price volatility and heightened risk from the tightening in the credit markets.
 
  •  Increased Risk of Counterparty Failures Could Negatively Impact our Financial Position: The Company uses financial instruments to reduce its overall exposure to the effects of currency fluctuations on cash flows. In addition, in order to manage the mix of fixed and floating rates for its outstanding debt, the Company has entered into interest rate swaps to change the characteristics of interest rate payments from fixed-rate to short-term, LIBOR-based variable rate payments. The Company is exposed to credit loss in the event of nonperformance by the counterparties to these financial instruments. In order to minimize this risk, the contracts are distributed among several leading financial institutions, all of whom presently have investment grade credit ratings. Although the Company has not experienced and does not anticipate nonperformance by its counterparties, in light of the ongoing threats to financial institutions from the global financial crisis, there can be no assurance of performance by the counterparties to these financial instruments.


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  •  Impact of Negative Returns on the Investments Held by the Company’s Pension Plans: The significant decline in value of many equity and debt securities due to the global financial crisis has had a negative impact on the value of the assets in the Company’s pension plans. Although it is still too early to determine the full extent of this impact for the full year 2008, this decline in value could trigger requirements for the Company to make higher than normal contributions to the pension plans in 2009.
 
  •  Potential Impact on Ability to Sell Receivables: From time to time, the Company sells accounts receivable and long-term receivables to third parties. Sales are made both on a one-time, non-recourse basis and under committed facilities that involve contractual commitments from third parties to purchase qualifying receivables up to monetary limits. These sales of receivables provide the Company the ability to accelerate cash flow when it is prudent to do so. The ability to sell (or “factor”) receivables, particularly under committed facilities, is often subject to the credit quality of the obligor and the Company’s ability to obtain sufficient levels of credit insurance from independent insurance companies. Although the Company has not currently been limited in its ability to sell receivables, the severe tightening in the credit markets as a result of the current financial crisis could limit the Company’s ability to sell receivables in the future, particularly if the creditworthiness of our customers’ declines. In addition, in certain circumstances it has become more difficult and more expensive to obtain and maintain credit insurance.
 
We have deferred tax assets that we may not be able to use under certain circumstances.
 
If the Company is unable to generate sufficient future taxable income in certain jurisdictions, or if there is a significant change in the actual effective tax rates or the time period within which the underlying temporary differences become taxable or deductible, the Company could be required to increase its valuation allowances against its deferred tax assets resulting in an increase in its effective tax rate and an adverse impact on future operating results.
 
If our goodwill or amortizable intangible assets become impaired we may be required to record a significant charge to earnings.
 
Under generally accepted accounting principles, we review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is tested for impairment at least annually. Factors that may be considered a change in circumstances, indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable, include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry. We may be required to record a significant charge in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, negatively impacting our results of operations.
 
This excerpt taken from the MOT 10-Q filed Jul 31, 2008.
Item 1A. Risk Factors
 
The reader should carefully consider, in connection with the other information in this report, the factors discussed in Part I, “Item 1A: Risk Factors” on pages 18 through 27 of the Company’s 2007 Annual Report on Form 10-K. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere.
 
This excerpt taken from the MOT 10-Q filed Aug 2, 2007.
Item 1A. Risk Factors
 
The reader should carefully consider, in connection with the other information in this report, the factors discussed in Part I, “Item 1A: Risk Factors” on pages 16 through 24 of the Company’s 2006 Annual Report on Form 10-K and on page 43 through 44 of the Company’s first quarter 2007 Form 10-Q. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere. In addition to the factors included in the Form 10-K and in the first quarter 2007 Form 10-Q, the reader should also consider the following risk factor:
 
We face risks related to ongoing patent-related disputes between Qualcomm and Broadcom.
 
Motorola is a purchaser of CDMA EV-DO baseband processor chips and chipsets from Qualcomm Incorporated (“Qualcomm”). Qualcomm and Broadcom Corporation (“Broadcom”) are engaged in several patent-related legal actions. In these cases, Broadcom is seeking orders to ban the importation into the U.S. of Qualcomm’s EV-DO baseband processor chipsets and certain “downstream” products that contain them (including Motorola CDMA handsets) and/or limit Qualcomm’s ability to provide certain services or take certain actions in the U.S. relating to the chipsets.
 
Unless there are intervening events, on August 6, 2007 an order of the U.S. International Trade Commission (the “ITC”) will go into effect excluding (among other things) the importation of new model CDMA handsets that contain Qualcomm’s EV-DO baseband processor chip. A final outcome adverse to Qualcomm in the ITC action and/or other actions pending in Federal courts could have a negative impact on Motorola’s performance, particularly if the outcome extends to Motorola’s products by making it impossible, difficult or more expensive to make and/or import our products into the U.S. While Motorola continues to work with Qualcomm and others on contingency plans relating to these cases, there is no guarantee that such plans will prove successful or be immune from further legal challenge.
 

EXCERPTS ON THIS PAGE:

10-Q
May 6, 2009
10-Q
Oct 30, 2008
10-Q
Jul 31, 2008
10-Q
Aug 2, 2007

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