Before the market opens tomorrow, mobile device maker Motorola (NYSE: MOT) is going to be announcing its fourth quarter numbers, and analysts are expecting to see a break even quarter from the struggling company.Despite being one of the best known makers of cell phones, Motorola has had a tough couple of years, and has been losing its market share at an alarming rate. In 2007, the company remained the number two maker of cell phones, but 2008 was tough on the company, which now finds itself down in fifth place in market share.
The main problem for Motorola is that the company has not been able to replicate the massive success that it had with its once popular Razr model, and consumers have been looking elsewhere for their cell phone needs.
For the fourth quarter, we already know that the company shipped around 19 million cell phones. This is a 25% drop from the third quarter, and an unusual drop considering this came during the typically better holiday shopping season. Compared with the fourth quarter 2007, this was over a 50% decrease in shipments.
The slowdown in the company's business has forced it to join the layoff parade that is sweeping the country, and announced last month that it would be cutting an approximate 4,000 jobs. This reduction in the company's workforce is on top of an already announced plan to lay off 3,000 employees back in October.
Over the past year, the company's stock price has taken a pretty tough beating, and is currently trading at $4.50, down from $12.90 this time last year.
The company is dealing with trying to gain market share at a time when the overall sector is showing weakness. If it was tough for the company to compete when cell phone sales were strong, it is going to be even tougher to stay competitive during 2009, a year in which analysts think cell phone sales are going to be moving lower. Most analysts agree that cell phone sales will drop by around 9% during the current year. This is the first market wide slowdown for cell phones since 2001, and provides some tough obstacles for the company to overcome.
Looking at the most recent quarter, analysts are estimating that the company will show $0.00 EPS, and report revenue of $7.15 billion.
Analyst opinion: Credit Suisse analysts feel that the stock is probably as low as it will go, and they do not see too many reasons for expecting to see any further decay in stock price. Having said that, they are by no means bullish on the company, and believe that the long term fundamentals on the company "remains unattractive".
For now, it would be hard to justify jumping into the stock, even at its low trading price. While it is true that the downside looks pretty limited at this point, there just does not appear to be enough upside potential to justify adding this company to your portfolio.
What are your predictions on the company? Should we expect to see Motorola put up better than expected numbers for the quarter? And what about long term, do you think Motorola is going to be able to climb back into its position as a market leader for the cell phone industry?
Let us hear your opinions on the company!
Here is a 12 month chart on the stock so you can get a better perspective on how the company has traded over the past year:
Cramer on BloggingStocks: The Fed's push for TARP payback 
Hewlett-Packard reports growth in profit and operating margin in Q4
Before the bell: Stocks futures steady ahead of GDP, housing data
Reader Comments (Page 1 of 1)
2-02-2009 @ 5:42PM
iphonerulez said...
This company's management has been crap for years. Buying companies left and right and getting absolutely nothing out of it. Letting go of Freescale, which was doing very well at the time. Getting involved with those Uzan family crooks and practically giving billions of dollars away. The Iridium satellite debacle in which they threw away about $10 billion dollars and got $0 back. Buying a fine company such as Symbol Technologies and getting next to nothing back and ruining such a decent company. They give the top executives, such as that prick Zander a sweet golden parachute while laying off thousands of employees, even though those like Zander were the ones ruining the company.
Trying to stretch an old handset's usefulness when they should have been planning for far newer style phones. I could go on and on about that crappy company. They were in China for years and couldn't gain any worthwhile revenue. Losing investor's money every year since 2000 from about $60 a share to this current pathetic $4.50 a share range. All those executives should burn in some fiery pits. They're as bad as Madoff. Fattening their own pockets while deceiving and stealing from employees and investors alike.
The SEC wants to examine Apple? Why didn't they do that to the executives at Motorola who were lying to investors about great future products and increased sales. Those greedy Motorola executive pricks.