Did Motorola Beat Estimates Via a "Samsung-Effect"?

Jul.20.06 | About: Alphabet Inc. (GOOG)

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Motorola Earnings Surge by 48% With Help From Razr Cellphones

  • Summary: Motorola's stock rose 8.5% in late trading after the company announced Q2 results. Key details: Revenue up 29% to $10.88 billion. Profit up 48% to $1.38 billion. EPS of $0.54 included 21 cents of one-time gains. Handset market share up four percentage points to 22%. 51.9 million phones sold during the quarter. Handset sales were driven by the Razr phone. Two-thirds of sales came from cell phones. Average selling prices down 1%, but operating margins of mobile device division rose to 11.2% versus under 10% before the Razr was introduced in late 2004. Operating earnings from the networks business (Motorola's infrastructure business) fell to $386 milion from $494 a year earlier.
  • Comment on related stocks/ETFs: The stock was up because Motorola (MOT) beat analyst estimates and raised its guidance above consensus. Revenue of $10.88 billion beat the consensus of $10.27 billion and EPS of $0.33 (excluding the one-time gains) beat consensus of $0.31. The WSJ article also didn't cover MOT's guidance: Q3 revenue of $$10.9-11.1 billion, up 20-23%, and above the consensus estimate of $10.5 billion. More details in the conference call transcript. A key question for Motorola is how much it benefited from the change in Samsung's new product roll-out schedule. If it did, that's only a temporary gain, as Samsung will soon release a slew of new products.