To: The Freep who wrote (14423 ) 12/18/2001 9:06:08 PM From: Sully- Respond to Motorola (MOT) 16.61 +0.34: When will it end? Motorola is making a habit of disappointing the investment community. It began at the beginning of last year when mgmt was predicting 10% operating margins on handsets by the end of that year. Then, it seemed every conference call since then they were guiding that number down. Handset margins are not so much of a focus these days as the company is barely profitable overall. After the close today, management affirmed guidance for Q4, however, warned for Q1 and 2002. Management refuses to couch its guidance as a warning because they have never given financial guidance for 2002. In my book, if you are going to miss consensus estimates, that's a warning. Motorola affirmed EPS guidance for all of 2002 at $0.15. Our sense is that'll be tough to do as it appears management did whatever it had to do to avoid a front page headline tomorrow that Motorola is guiding 2002 lower. However, the math looks fuzzy. For Q1, analysts were expecting a 4% sequential decline in sales and a loss of $(0.03), according to Multex. Management expects a 14% sequential sales decline and a loss of $(0.14)-$(0.11). That's a heck of a lot of ground to make up in the remaining three quarters. Again, it appears to be yet another overly ambitious forecast from management only to guide down later. Their credibility is waning. It's not just us. During the Q&A portion of the conference call, a number of analysts seemed to be scratching their heads on how mgmt expects to meet the $0.15 starting Q1 this far in the hole...The company provided little detail, preferring to wait until their normal January call. They expect handset margins to improve next year and announced another round of job cuts. But it still does not seem to add up...Briefing.com has been positive on the stock for a while now as a long term turnaround candidate. Despite the constant bad news, our view has not changed. It appears the market has already priced in constant warnings as the stock has not traded down much over the last few announcements. It could be dead money for a while and do not be surprised of more warnings. However, it's a great brand name and a solid long term play on wireless. It just may be a bumpy ride. -- Robert J. Reid, Briefing.com
