Motorola: Fallen and Can't Get Up

For Motorola (MOT), the darkest days may still lie ahead.

Tero Kuittinen, an analyst with Global Crown Capital, this morning repeated his Underweight rating on Motorola, and cut his price target on the shares to $2.50, from $3.50. He thinks the company will miss its Q4 guidance, and fall short of the 2009 consensus “by a wide margin.” In short, Kuittinen contends that “Motorola is now on the verge of losing its status as a global handset brand.”

Kuittinen says that recent discussions with AT&T (T) and Verizon (VZ) “imply a clear slowdown in sales, just as the level of U.S. competition is vaulting to a new level with the launches of LG Incite, Samsung Eternity and other appealing and conspicuously cheap November debuts.”

He says that AT&T is “moving away from Motorola as fast as it can,” and that the “quadruple punch” of new models from LG, Samsung, Apple (AAPL) and Research In Motion (RIMM)  is “devastating to Motorola because the pricing of these phones is extremely aggressive.”

He asserts that “the U.S. is fast becoming a nation of smartphone users…and that Motorola is likely suffer significant market share losses in the U.S. because it has the weakest smartphone product line out of all the competition.”

Kuittinen contends that Q4 results will be hurt by excess channel inventory; he says carriers are trimming their inventory of Motorola phones in expectations of an unseasonably weak Q4. “As a result,” he says, “we are very concerned that Motorola’s situation could deteriorate much faster than projected by Wall Street.” He thinks the company could see units drop to 21.5 million in Q4 and 18 million in Q1, from 25.4 million in Q3, and 28 million in Q2, “dangerous levels for a company with a bloated global sales, marketing and production machinery.”

And if you think there is an M&A rescue coming, guess again: as Kuittinen notes, that is not likely in the current credit environment. He thinks Motorola over the next few quarters could be forced to undertake “a radical restructuring, possibly marking the end of Motorola as a global brand.”

MOT today is down 38 cents, or 9.4%, to $3.53.

Comments

[who:]

its not whether MOT can get up - more like can the DOW, Nas, Russell get up! many stocks are below $10 - only way is down!

2008 Nov 19 10:16 PM

[TinyTim:]

is that website f*ucked companies still around?

Moto needs to throw in the towl on handsets and concentrate of the other two businesses. one of which goes back to the 1920's.

Oh yeah, and screw Chris Galvin

2008 Nov 20 03:49 PM

[TinyTim:]

Many apologies, I meant:

f*cked companies

And Chris put it in the dumper, despite his whining.

2008 Nov 20 03:51 PM