Lehman Bros Comments on Motorola's EV-DO RAZR (MOT)

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Motorola V3cMotorola (ticker: MOT) announced today the release of an EV-DO version of the RAZR, including a 1.2 megapixel camera, expanded memory (V3i), and additional color formats of the original RAZR (pink and blue). In a note to clients, Lehman Brothers' Tim Luke and Jeff Kvall commented on the RAZR V3c (pictured), its implications to MOT stock, and projections for handset sales. Excerpts:

Overall, we view the news as a strategic positive for Motorola, particularly given the device launches coincide with the seasonally strong holiday period. We continue to view our 4Q05 estimates of $10.4B in revenues (+10% QoQ) on 44.4M units (+15%) and EPS of $0.34 as conservative, particularly given historical QoQ revenue growth of +18% in 4Q04 and 4Q03. Our checks suggest that demand trends at Motorola remain favorable, benefiting from overall market strength and improved market position, while channel inventory levels remain low.

From an industry perspective, recent meetings with Nokia support our view that overall market trends remain healthy and may exceed Nokia's 780M global unit estimate. Our estimates remain 795M for 2005 (+17% YoY). Fundamental dynamics including emerging market growth (with some pockets of solid replacement demand taking hold within those markets) suggest solid growth continues into 2006.


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