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While shares of Motorola Inc. (MOT/NYSE) have fallen below US$19 from a six-month high of US$26.20 in mid-October, RBC Capital Markets analyst Mark Sue is optimistic about some of the company’s recent steps toward improving margins, even calling chief executive Ed Zander “The Man With The Margin Plan.”

Mr. Sue has a US$24 price target on Motorola shares and an “outperform” rating.

While he is not sure Motorola’s decision to cut prices was the right move, the company’s announcement last week that it will lay off 3,500 people will save it an estimated US$400-million.

Motorola’s first quarter revenue forecast is within the consensus range, while its full-year revenue forecast is ahead of the street, Mr. Sue said in a research note. “The bulk of Motorola’s gross and operating margin improvements should occur during the second half and we are flattening our near term trajectory,” he said, noting that his full-year estimates remain essentially unchanged.

Motorola may begin shipping its new Scpl (Scalpel) line of mobile phones in October, which will replace previous popular models like the Razr.

The first Scpl model will be called the “Motofone,” and will target developing nations, Mr. Sue said, adding that it will “bring a barely believable set of performance characteristics to the low-cost, high-volume mobile phone market.”

He also noted that Motorola is still deciding whether or not to bring the touch screen Ming personal digital assistant smart phone to the U.S.

Without a better view of what exactly Motorola’s handset product portfolio will look like, investors may continue to be skeptical about prospects for the company’s shares.

Transcript of Motorola's fourth quarter conference call 
For more on the Scalpel
For more on the Ming

Source: Motorola Scpl and Other Moves Should Help Its Margins