Motorola (MOT)
This week, Motorola (MOT: Charts, News, Offers) released an earnings report of a profit of $162 million or $.07 per share in Q2. In Q2 of last year, Motorola posted a profit of $26 million and $.01 a share showing vast improvement in a year’s time. Smartphone sales supplied a great deal of the revenue, but Motorola’s sale of most of its wireless networking equipment business to Nokia (NOK: Charts, News, Offers) was also a factor, bringing in $1.2 billion in cash. Posting a profit has been a long time coming for Motorola, especially the handset division, which has reported losses for almost four years straight.
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Stock Analysis
Motorola is a study in the volatility of the wireless phone market. It was not long ago that the mobile phone manufacturer had teamed up with Nextel (before the Sprint (
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Resting on the success of the Razr, Motorola did not seem to anticipate the smartphone craze that was about to sweep the world. The release of the Apple (
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The Droid X is selling out all over the country and Verizon is talking about “strong demand for the Droid X platform.” In fact, Motorola is struggling to keep up consumer requests for the Droid X. Motorola co-CEO, Sanjay Jha stated during the 2Q conference call that a shortage of mobile phone chips is the greatest hindrance to Motorola keeping up with Droid X demand. Jha predicts that Motorola will ship 12 million to 14 million smartphones this year and if chip supply issues were not a problem, that number could be even larger. However, per usual in the smartphone market, another manufacturer is planning to release a phone that will compete well against the Droid X: the Android-based, Samsung Fascinate. The Fascinate looks to be released before the end of the summer; however Motorola must have learned the consequence of standing pat with a hot cell phone on their hands. There is already talk of the Motorola answer to the Fascinate, namely the Droid 2 which many believe will be released in early fall.
At one point, Motorola seemed destined for the scrap heap of mobile phone manufacturers, however, recent news indicates that innovation and reinvention are still alive at the Schaumburg, Illinois based company. Motorola plans to get into the mobile websurfing market with the anticipated release of an Android-based “tablet device” that hopes to compete with the Amazon (
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Can Motorola go toe-to-toe with the big boys like Verizon, AT&T (T: Charts, News, Offers) or Sprint and survive for the long-haul? With an ally like Google and good corporate restructuring, they have a shot.
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“Can Motorola go toe-to-toe with the big boys like Verizon, AT&T or Sprint”??? Why would Motorola want to go toe-to-toe with their customers?