Motorola's (MOT) Poor Strategy by Barron's
Summary: Following Nokia (NYSE: NOK - News)'s surprise high earnings report last week, Motorola (NYSE: MOT - News)'s 4Q results from two weeks earlier paled even more. Nokia's cellphone margins were actually up, despite intense competition and resulting phone price cuts. The company's handset operating margins rose to 17.8%, up more than 2% from the previous quarter, while Motorola, at 4.4%, went half as high as anticipated. All handset competitors have suffered from shrinking margins, with the sole exception of Nokia and Sony (NYSE: SNE - News)-Ericsson (NasdaqGS: ERIC). Motorola is taking growth in market share and volume in emerging markets, at the cost of margins and profit. Slashing the cost of its popular RAZR model resulted in increased market share at the expense of its other handsets. The gap between the two giants can widen in the short term, as Nokia releases new handsets, rich in feature and fashion. Due to the great success of Motorola's RAZR, Nokia had adopted a strategy of scale and cost, allowing it to succeed while the competition flounders. Motorola is currently trading at 15.2x earnings, versus Nokia's 17.2. Bottom Line: "After two quarterly-earnings misses in a row and with no hot successor to the RAZR in sight..Motorola stock appears to be no better than dead money for at least the first half of 2007."
Published by SeekingAlpha
posted by Stock Administrator @ 12:26 PM
Motorola's (MOT) Poor Strategy by Barron's
Summary: Following Nokia (NYSE: NOK - News)'s surprise high earnings report last week, Motorola (NYSE: MOT - News)'s 4Q results from two weeks earlier paled even more. Nokia's cellphone margins were actually up, despite intense competition and resulting phone price cuts. The company's handset operating margins rose to 17.8%, up more than 2% from the previous quarter, while Motorola, at 4.4%, went half as high as anticipated. All handset competitors have suffered from shrinking margins, with the sole exception of Nokia and Sony (NYSE: SNE - News)-Ericsson (NasdaqGS: ERIC). Motorola is taking growth in market share and volume in emerging markets, at the cost of margins and profit. Slashing the cost of its popular RAZR model resulted in increased market share at the expense of its other handsets. The gap between the two giants can widen in the short term, as Nokia releases new handsets, rich in feature and fashion. Due to the great success of Motorola's RAZR, Nokia had adopted a strategy of scale and cost, allowing it to succeed while the competition flounders. Motorola is currently trading at 15.2x earnings, versus Nokia's 17.2. Bottom Line: "After two quarterly-earnings misses in a row and with no hot successor to the RAZR in sight..Motorola stock appears to be no better than dead money for at least the first half of 2007."
Published by SeekingAlpha
Published by SeekingAlpha
posted by Stock Administrator @ 12:26 PM
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