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Following its earnings announcement on Friday, Motorola (MOT) held a half-day meeting with analysts in New York. Participants walked away with more questions than answers: not many believe Motorola has a quick fix for its eroding margins and slowing profit growth. Ergo, the stock began selling off yesterday, reversing a bounce on Friday on news the company plans to trim its workforce by 3,500 people.

The analyst meeting spurred plenty of Street commentary today, most of it written with a worried tone. Here is a rundown on some of this morning’s batch of reports, starting with the bears. (There’s more of them.):

  • James Faucette, Pacific Crest: We believe that Motorola hitting management’s targeted 2007 EPS range depends on increasing the average selling price for handsets during the second half, a scenario that we view to be unlikely given that Motorola is making major changes to its handset designs and facing increasing competition from Samsung, LG, Sony Ericsson and Apple (NASDAQ:AAPL)…We do not believe that the small premium valuation the market is currently affording Motorola vis-a-vis Nokia (NYSE:NOK) is merited, particularly given that we believe forward estimates for Motorola may prove overly optimistic.
  • Bill Choi, Jefferies: We remain on the sidelines, with uncertainty over U.S. market share in 2007 (where MOT’s share is double its global average) that could pressure handset ASPs and limit margin expansion opportunities.
  • Samuel Wilson, JMP: Maintaining our Market Underperform rating and lowering our price target from $19 to $17…the company’s ability to gain market share in handsets without resorting to price reductions is limited since its successful RAZR product cycle is now mature…we believe that over the next two quarters at best the company will be caught between handset product cycles. This means tough market conditions and unfavorable comparables.
  • Richard Valera, Needham: If the company is able to pull off its targeted [second half 2007] margin improvement the stock is likely a Buy at current levels, trading at 16x our pro forma 2007 estimates. However, given the potentially meaningful risks associated with achieving this ramp, we remain on the sidelines pending further evidence this ramp is achievable.
  • Tal Liani, Merrill Lynch: We believe management’s target of double-digit operating margins by [the second half] is overly aggressive, implying downside risk to estimates…from discussions with management, we believe that Motorola is not likely to make any large acquisition soon, and in fact has very little interest to buy Juniper (NYSE:JNPR), Redback (RBAK), or any other switching/routing company.
  • Maynard Um, UBS: Recovery may take [the] better part of 2007 and expect [the] stock to be largely range bound.
  • Casey Ryan, Nollenberger Capital: We do not believe that Motorola’s management has chosen the right path [to] resolve the primarily handset-driven gross margin problems the company faces. Motorola’s plan for increasing unit volume sales in emerging markets suggests the mix of low-end phones will increase in FY 07, not decrease, increasing ASP and gross margin pressure.
  • There are still a few bulls:

  • Michael Ounjian, Credit Suisse: We continue to believe MOT is well-positioned for growth and margin expansion through increases scale and operating efficiencies in mobile devices and accelerating growth in other segments…valuation remains compelling at current levels.
  • Mark Sue, RBC Capital:There’s a plan in place to fix the issues at Motorola and the company will work to improve gross margins by simplifying its platforms and further reducing component costs. We’re not sure slashing prices to preserve shelf space was the right thing to do, but the CEO assured us that Motorola would exercise more discipline in the future…We believe downside to Motorola’s shares may be limited. The proof will be in the revamped handset portfolio which implies catalysts may still remain a quarter or two away.
  • Motorola was down 68 cents yesterday at $18.59.

    Source: Motorola Continues To Disappoint Analysts