Motorola's Stock Extremely Sensitive to Changes in Mobile Phone Market Share

Jul.26.10 | About: Alphabet Inc. (GOOG)

We currently have a Trefis price estimate of $7.42 for Motorola’s (MOT) stock, about 4% below the current market price of $7.74. Trefis members have created forecasts for two key drivers of Motorola’s stock over the last week: (1) Motorola Mobile Phone Market Share and (2) Global Mobile Phones Sold. Their forecasts suggest that Motorola Mobile Phone Market Share will trend slightly above the Trefis forecast, while Global Mobile Phones Sold will trend slightly lower. These projections suggest a combined upside of nearly 14% for Motorola’s stock.

Mobile Phones constitute around 26% of the $7.42 Trefis price estimate for Motorola’s stock. Slower than expected decline in Motorola’s mobile phone market share means more competition for other mobile makers like Research in Motion (RIMM), Apple (NASDAQ:AAPL), and Nokia (NYSE:NOK).

Since the Mobile Phones business contributes significant value to Motorola, the stock is quite sensitive to (1) Motorola Mobile Phone Market Share and (2) Global Mobile Phones Sold. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

1. Motorola Mobile Phone Market Share

The average of forecasts for Motorola Mobile Phone Market Share created by Trefis members indicated a projected decrease from 2.9% in 2010 to 2.2% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from 2.5% in 2010 to 1.4% by the end of the Trefis forecast period. The member estimates imply an upside of 14% to the Trefis price estimate for Motorola’s stock. In the past, Motorola Mobile Phone Market Share has decreased from about 16% in 2005 to 4.5% in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Motorola’s stock to Motorola Mobile Phone Market Share.

2. Global Mobile Phones Sold

The average of forecasts for Global Mobile Phones Sold created by Trefis members indicated a projected increase from about 1,271 million in 2010 to 1,794 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 1,299 million in 2010 to 1,826 million by the end of the Trefis forecast period. The member estimates imply very little downside to the Trefis price estimate for Motorola’s stock. In the past, Global Mobile Phones Sold has increased from 903 million in 2005 to 1,237 million in 2009.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Motorola’s stock to Global Mobile Phones Sold.

Disclosure: No positions