Zander, the 'Man'
Jake,
<< I really thought Zander was the 'man'... >>
Most people did. I did. Wall Street did. He certainly talked the talk, and it looked like he could also walk the walk. It is wise to remember, however, that he walked into an exceptional situation from a timing perspective. Motorola was well on the way to recovery when he assumed responsibility due to the efforts of Chris Galvin and Mike Zafirovski who stayed on with Moto till January 31 2005, and the RAZR was already waiting in the wings for Ed. Ed took over January 5, 2004 with MOT at ~$14.50. His 1st quarter on board was really a good Moto quarter, and he had little to do with it. It was onwards and upwards from there.
Too early to write Ed or Moto off, and when they bottom they could be a great recovery play once again. They have streamlined rather nicely, have a solid cash position (although cash flow near term looks bleak), have significantly reduced debt, and one of the things that they have done well in mobile devices is improve distribution.
At ~$17.60 MOT is only down ~6% today at noon, and considering the gravity of last evenings warning that's not bad, but they are at a 20+ month low. Their 2005 low was $14.48 (April 2005) but they ended the year at $22.59. They had ended 2004 at $17.20.
BTW: Thanks for taking over moderation of this board and taking action against a serious distraction.
>> Market Report -- Story Stocks (MOT)
Kimberly DuBord
Briefing.com
March 22, 2007
tinyurl.com
Typically, Schaumburg isn't known for being a "hot spot," but recently it's become the center of a speculation windstorm involving its most tech savvy resident, Motorola (MOT, 18.74). After Carl Icahn set his sights on the handset giant, the rumor mill has been in full swing over a possible private equity buyout and potential bid for Palm (PALM, 18.74). At this point, everything and anything is on the table as Motorola's turnaround has stopped dead in its tracks.
After Wednesday's close, CEO Ed Zander, once heralded as a turnaround artist, forecast a loss for this quarter and the first sales decline in four years. After the bombshell, shares dropped like a dropped call to their lowest level in two years in extended trading.
Earnings and revenues are now expected to come in substantially below forecast, resulting from plunging handset prices. MOT now predicts first quarter revenues will be between $9.2 and $9.3 bln versus its original guidance of $10.4-$10.6 bln. The new earnings guidance isn't even in the same ballpark as consensus, predicting breakeven to two cents per share, compared to the street's expectations of $0.17.
Motorola also announced management reshuffling, naming a new CFO and COO. Zander himself is facing a growing chorus of investor discontent for the company's failings. Motorola is already in the midst of a marketing and production design overhaul aimed at making its prices competitive without sacrificing earnings. Until now, MOT has chosen market share over profitability.
In an attempt to whet investors' appetites, the company also outlined a detailed plan to step up its share buybacks by two billion dollars to $7.5 bln amid a proxy fight with shareholder Carl Icahn.
The turn of events at Motorola is incredibly disappointing for the company that was able to bring itself back from the brink, gaining market share and mind share in this highly competitive handset environment. And while shares remain cheap, for good reason, we expect these challenges in the handset business will persist through 2007. Over the next few quarters, Motorola needs to rebalance its product portfolio through richer experience devices, a more sensible pricing strategy, and improved handset cost structures. Until there is clear evidence of a turnaround, the downside pressure on shares will likely persist. ###
- Eric - |
