March 3, 2011, 4:22 p.m. EST
Motorola shares sink as iPad 2 wows analysts
Cowen downgrades Motorola, saying Xoom tablet prospects fading
March 3, 2011, 4:22 p.m. EST
Motorola shares sink as iPad 2 wows analysts
Cowen downgrades Motorola, saying Xoom tablet prospects fading
By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) — Shares of Motorola Mobility slumped Thursday as the new iPad won rave reviews, with one analyst saying Apple Inc. just blew away its rival’s chances of positioning its Xoom tablet as a key competitor.
Motorola Mobility /quotes/comstock/13*!mmi/quotes/nls/mmi (MMI 26.80, +0.02, +0.08%) shares fell 5.6% to close at $26.78 after Cowen and Co. downgraded the stock to neutral from outperform, a day after Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 359.50, -0.06, -0.02%) unveiled the iPad 2. Apple shares gained 2.1% to close at $359.56.
“Motorola Mobility’s window of opportunity to establish Xoom looks to be narrowing more rapidly than expected as Apple’s iPad 2 launches in the U.S. next week at mostly sub-Xoom price points and sporting a stronger than anticipated feature set,” analyst Matthew Hoffman said in a note.
Hoffman said he still expects Xoom, which launched recently, to “find a home among hardcore proponents of the Android operating system/ecosystem, given it is a solid first product for that key developer community.”
Is iPad 2 a buy?
In December, columnist Brett Arends explained why he thought buying an iPad for Christmas was a bad idea. So has the iPad 2, with more features at the same price, changed his mind?
But he said the “arrival of a much thinner, still-cheaper” iPad 2 “leaves us less optimistic about the Xoom’s near-term prospects.”
Analyst Tero Kuittinen of MKM Partners offered a different view, arguing that Motorola is well-positioned in the expanding tablet market with its dual-core chip and use of Honeycomb, the latest version of Google Inc’s /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 609.67, +0.11, +0.02%) popular Android operating system.
Motorola Mobility, Kuittinen said, is also poised to become “the vanguard of launching quad-core tablets and phones in the second half of 2011.”
“We believe Motorola has a chance to top four million units in tablet sales in 2011 thanks to multiple form factors and expected international traction,” Kuittinen wrote.
Benjamin Pimentel is a MarketWatch reporter based in San Francisco.
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