Couple of more interesting comments on Motorola (NYSE:MOT) after the co issued its Q1 results yesterday morning:
- Morgan Stanley thinks the worst appears to be behind Motorola at this point, but as its competitors have captured momentum and mind share in 3G as well as at the low-end in emerging markets, regaining its footing - and more importantly its profitability -- in these critical growth areas will likely be a long-tailed story. Firm would get more constructive on increasing product synergies across its handset, cable, and networks businesses or new model introductions that could increase pricing power and operating margins. Conversely, they would get more negative on shares if the handset cost actions, most of which they think should have been well underway by this point, will merely offset an increasingly competitive environment.
MSCO's EPS estimate for 2007 drops 8c to 34c on reduced sales partially offset by a higher GM. For 2008, their forecast improves by 7c to 93c on higher ASPs and a better GM.
Motorola is a reasonably valued restructuring story, where reset expectations, in particular a low bar for Q2, could drive shares toward $20, or around one times EV/sales using C2008 estimate. Firm's fair value estimate for shares is around $18.50, which assumes that Motorola gets back to double digit operating margins by late 2008. Maintains Equal Weight.
- Deutsche Bank says that although they have a Hold rating and their PT is 18.6% below MOT's current trading price, they believe the stock, in the short run, is expected to see some bounce due to the well-publicized ongoing proxy fight between Carl Icahn and Motorola.
From what they heard on the call, the new team has not yet formulated a real strategy for turning around the mobile unit. While management called out several initiatives none of these were new - rationalizing the supply chain, new silicon vendors, standardizing software, etc. All were things the company had discussed when Mobile Devices still had double digit (positive) operating margins
They do not think Motorola is a company broken beyond repair. They have problems, and they need to fix them. There are some signs of progress, but the toughest changes lay ahead and will still take some time. They think the market continues to underestimate the timing of a turnaround at Motorola.
Notablecalls: I think that over the next qtrs MOT stock will continue to climb the wall of worry. There will be setbacks but I think these will prove to be buying opportunities. Motorola will get its mojo back eventually. Meanwhile we have Mr. Icahn looking out for the shareholders and of course, the stock price.
- Morgan Stanley thinks the worst appears to be behind Motorola at this point, but as its competitors have captured momentum and mind share in 3G as well as at the low-end in emerging markets, regaining its footing - and more importantly its profitability -- in these critical growth areas will likely be a long-tailed story. Firm would get more constructive on increasing product synergies across its handset, cable, and networks businesses or new model introductions that could increase pricing power and operating margins. Conversely, they would get more negative on shares if the handset cost actions, most of which they think should have been well underway by this point, will merely offset an increasingly competitive environment.
MSCO's EPS estimate for 2007 drops 8c to 34c on reduced sales partially offset by a higher GM. For 2008, their forecast improves by 7c to 93c on higher ASPs and a better GM.
Motorola is a reasonably valued restructuring story, where reset expectations, in particular a low bar for Q2, could drive shares toward $20, or around one times EV/sales using C2008 estimate. Firm's fair value estimate for shares is around $18.50, which assumes that Motorola gets back to double digit operating margins by late 2008. Maintains Equal Weight.
- Deutsche Bank says that although they have a Hold rating and their PT is 18.6% below MOT's current trading price, they believe the stock, in the short run, is expected to see some bounce due to the well-publicized ongoing proxy fight between Carl Icahn and Motorola.
From what they heard on the call, the new team has not yet formulated a real strategy for turning around the mobile unit. While management called out several initiatives none of these were new - rationalizing the supply chain, new silicon vendors, standardizing software, etc. All were things the company had discussed when Mobile Devices still had double digit (positive) operating margins
They do not think Motorola is a company broken beyond repair. They have problems, and they need to fix them. There are some signs of progress, but the toughest changes lay ahead and will still take some time. They think the market continues to underestimate the timing of a turnaround at Motorola.
Notablecalls: I think that over the next qtrs MOT stock will continue to climb the wall of worry. There will be setbacks but I think these will prove to be buying opportunities. Motorola will get its mojo back eventually. Meanwhile we have Mr. Icahn looking out for the shareholders and of course, the stock price.
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