Several firms have commented on Motorola (MOT) after the company's well-attended "Mobile Experience" meeting in New York. Following the product announcements, the company hosted a lunch meeting with CFO Tom Meredith:
- Raymond James maintains their Strong Buy rating saying that first and foremost, Motorola will become fixated on improving its cash conversion cycle, leaning down inventories, and better managing receivables and payables. The cFO indicated the company would announce additional downsizing and restructuring (likely to be announced May 30 or 31). While no details were provided on the magnitude of such a downsizing, he indicated the initial downsizing was not nearly significant enough.
In general, management seems to have regained confidence following the humbling experience of profit and market share losses in the March quarter, a sign the business may be stabilizing.
- CIBC notes they remain comfortable with their thesis and Sector Performer rating on the company. They are warming to the story, but are still looking for evidence of a clear turn and signs of market traction with the new 3G models (like the Z8, Q9, and RAZR2, which were highlighted at the event) before turning more positive. Firm believes the turn has come yet and comments by new CFO Thomas Meredith suggest 2Q07 trends remain very tough.
- Banc of America notes they believe the new products, with similar design but better features and functionality, are a step in the right direction. They are also encouraged by the new leadership, and expect Mr. Meredith to be a change agent. Firm believes MOT is moving up market at a time when the handset industry is transitioning to more fully featured products. They believe this tend is favorable for Nokia, Sony Ericsson, Research in Motion, Palm, and QUALCOMM.
Notablecalls: Nothing really unexpected emerged from the meeting. The RAZR2 is a cool phone but hardly a game changer. Heads have started to roll at MOT and according to whispers a merger of company's Networks and Connected Home business units will be announced soon. This will create some savings but as the CFO hinted, will likely be just the beginning. Which is positive, of course. Motorola has become too bloated and unfocused and now needs to correct itself.
On another matter, SEC filings published last night showed that Eddie Lampert, the billionaire hedge fund manager known for making large bets on a few companies, including Hoffman Estates-based Sears Holdings Corp (NASDAQ:SHLD), has acquired a 925,000 share stake in Motorola. Lampert received special permission from the SEC to postpone disclosing the details of some of his holdings. That "confidential treatment" expired last night. The filings also showed he poured close to $800 million into Citigroup (NYSE:C) stock and another $30 million into Clear Channel (NYSE:CCU). Eddie didn't become rich by being stupid. It looks like his cost basis for MOT is pretty close to current market price. With Ichan and Lampert on board, I would not be surprised to see other big game hunters join soon.
Anyway, I continue to stand by my bullish thesis on Motorola.
MOT 1-yr chart