Motorola: No Improvement in Sight

| About: Alphabet Inc. (GOOG)

The fundamentals at Motorola (MOT) continue to deteriorate. Brantley Thompson, an analyst at Goldman Sachs, today trimmed his earnings estimates for the company for both this year and next year.

For 2007, he went to $1.01 a share from $1.23 (ex-stock options); for 2008 he went to $1.20 from $1.43.

Thompson notes that the company is now “pursing a selective strategy” in emerging markets where a lack of scale and distribution prevent it from making money. That seems reasonable, but it does mean lower market share. Thompson now sees the company losing 1 percentage point of market share in 2007; that is a reduction in his estimate of 350 basis points.

Thompson says the company needs to take out $3-$5 in costs from its low end devices, and gain more traction in higher priced 3G phones to offset pricing pressure from the increased mix of phones selling to emerging markets.

“We believe these initiatives will take time…and therefore do not look for a meaningful near-term improvement,” he writes. “We still believe risk remains to Street estimates.”

Motorola today is down 19 cents at $18.65.

MOT 1-yr chart

mot chart