Motorola: Garriques’s Departure from Cell Phone Business Doesn’t Change Much

The Street has been relatively muted in its reaction to the departure last week of Ron Garriques, the head of Motorola’s (MOT) cell phone business, following the recent disastrous trends in that business — i.e., disappointing sales of some phones, Razr-thin profit margins, and a general lack of direction.

On Friday, CIBC World Markets wireless analyst Ittai Kidron said Garriques’s departure changes nothing, because the fundamental issue for Moto is clear and remains unchanged, namely that they’ve got the wrong line of phones at the moment. Yesterday, Raimundo Archibald, an analyst with Kaufman Bros., says so much of the unit’s operation, both good and bad, is already planned out, that the current quarter won’t be affected by his leaving:

We do not believe the timing of Mr. Garriques resignation will have much bearing on the current quarter […] [M]uch of the pricing and product launch decisions for the quarter are already in place and are being executed upon. Longer term, we see the new leadership of the Mobile Devices business as having the opportunity to alter the unit’s strategic direction.

Archibald expects Moto’s operating profit in the phone business to rebound from low single-digits on a percentage of sales basis to 7% — less than the 10% operating margin CEO Ed Zander is talking about, over the next year or so. He maintains a Buy rating on Moto’s shares and thinks the shares are fairly valued at $23.

Moto shares closed down half a percent at $19.17 yesterday. They are down 7% this year.