Motorola Units, ASPs, Margins Under Pressure?
ce.seekingalpha.com
Posted on Nov 8th, 2006 with stocks: MOT
Eric Savitz (Barron's) submits: Lehman’s Tim Luke on Tuesday trimmed his fourth quarter expectations for Motorola’s (MOT) handset units, average selling prices and margins; he also trimmed profit forecasts and cut his price target on the stock to $27 from $30.
Luke says sales of the KRZR into the channel appear to be on plan, but he says that limited availability of W-CDMA phones and only a “modest” recovery in iDen phones “make our unit estimates aggressive.” With low-end W series phones and mid-range KRZR phones strong, the result could be lower-than-expected average prices and pressure on margins.
He also says that while KRZR sell-in has been solid, sell-through has been softer, noting that “the sales force at some carriers has been experiencing difficulty with KRZR’s initial lofty price premium (Wholesale approximately $300 for KRZR Vs approximately $130+ for RAZR.) He describes sales in Europe of the device as “languid,” with sales in China “moderate.” He is still bullish on the phone overall, and suggests that “Motorola may simply need to adjust the price to see volumes rise.”
Luke cut his 2007 EPS forecast to $1.51 a share from $1.57. For this year, he dropped a penny to $1.33 from $1.34.
Luke is maintaining his forecast for the overall handset market of 275 million units in the fourth quarter, 960 million for all of this year, and 9% growth to 1.05 billion in 2007.
Meanwhile, Citigroup’s Daryl Armstrong today increased his global handset forecast for this year to 968 million form 958 million, and introduced a 2007 forecast of 1.04 billion, or 7% growth. Lehman sees 14% growth in Asia next year, 6% in Europe/Middle East/Africa, but with flat units in the Americas.
Also today, Samsung raised its expectations on global handset units to 970 million from 950 million, and forecast 10% growth for next year, to 1.07 billion. |
