Monday, June 19, 2006

Calls of Note Part 4

- JP Morgan comments on Motorola (NYSE:MOT) saying that heading into the end of Q2, they believe MOT's handset volume remains strong in spite of the recent concern from Asian component suppliers, while the Networks business appears poised to bounce back in Q2,
RAZR demand looks strong. LG attributed a Q2 shortfall to competition in the US from the CDMA RAZR while we have learned that Samsung should also finish below plan this qtr also due to MOT's CDMA RAZR.

MOT has already sold out of its '06 CDMA RAZR run and component vendors with heavy RAZR exposure such as Foxconn, Knowles, and Silitech, appear very positive heading into 2H'06. We expect robust RAZR demand to be fueled by compelling prices as they est. GSM RAZR ASP is currently at $150/phone falling below $100 by Yearend.

Margin appears on track for a YE turnaround. MOT's impressive 21% share in China in May, up 830 bps over the last 6 months and Q1 India shipments which exceeded total FY'05 shipments show that emerging market investment is starting to pay off. At $20.08, ex. $4.75/share in net cash and investments, MOT trades at 10.4x firm's $1.48 FY'07E EPS est. (ex. options expense).

Notablecalls: Not actionable but good to know category.

- CIBC comments on Potash Corp (NYSE:POT) noting that with only two weeks remaining in 2Q06 and still no settlement to the Chinese and Indian potash contract, they believe there is little chance that potash sales to either destination will be counted for this quarter. As such, they have lowered their 2Q06 potash sales estimates from 2.36 million tonnes to 1.86 million tonnes and increased operating cost per tonne to ($70/t). Firm is still assuming a realized potash price of $152/t. 2Q06 EPS estimate is now at $1.03, below company guidance of $1.25 to $1.50 per share (which was based on $C/$US exchange rate of $0.87).

Notablecalls: I expect POT shares to trade down today.


notablecalls said...

If RAZR sales really are strong, it may move MFLX and SUPX, both known RAZR plays. With MFLX down 50% since May guidance, it's easy for it to produce a pos surprise.

notablecalls said...

on the other side, another RAZR play CAMD warned just last week.