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RBC Capital comments on Motorola (NYSE:MOT), noting the second quarter is a wash and so may be the third quarter, and they are reducing their unit estimates. For 2Q07 they are formally reducing unit assumptions from 46M to 40M. With channel inventories winding down but no real pick-up in Motorola's handset division, they are now estimating just 45M units for 3Q07 vs. consensus of 47M.

RBC's not sure Motorola's new found strategy of holding firm against the U.S. carriers is working too well. It's either units or ASPs and not both, it seems - hence the unit reductions. In the U.S., Apple remains the top-story at AT&T, and on the margin Samsung, and LG may be gaining an incremental share at Verizon, and Sprint. Recent top-selling phones include LG's VX8700, Samsung's SCH-u740, and Blackberry's Pearl family.

Motorola's stock is washed-out in firm's view and may shake-off further downward estimate revisions. But with no clear winning product cycle to provide some sorely needed boost, it believes the shares may drift for the balance of this year's investment horizon. 2Q07 revenue forecast declines from $9.5B to $8.7B vs. consensus of $9.3B, EPS remains at $0.03. RBC's 3Q07 forecast declines from $10.0B and $0.09 to $9.4B and $0.07, vs. street of $9.7B and $0.09. For CY08 they still estimate EPS of $1.00. Maintains Sector Perform and $19 target.

Notablecalls:
That's a pretty hefty rev cut for Q2. Yet, it looks like MOT stock can handle this. Last week there was some talk of Ichan doubling his stake in MOT, but no filings have showed up yet.

MOT 1-yr. chart:

mot

Source: Motorola: Hefty Q2 Revenue Cut At RBC