Through The Fly's Eyes: Motorola Inc.

from Theflyonthewall.com











Holy Blow-up; Holy Holes in Management

Motorola (MOT) missed the high-end 3-G product cycle in Europe and does not have the cost structure to compete in the higher growth, lower priced emerging markets. This double whammy led to a massive earnings and revenue miss and a serious management shake up.

In addition, although Motorola said its CDMA and US business was fine, one has to question the maturity of the US handset market and whether this business is also ready to role over.

Further, investors need to question the impact of the handset business shifting to smart phones. Motorola has a smart phone for the US CDMA market, called Q, but it appears Motorola might be behind others in the UMTS markets around the world.

Also, Internet access and expensive email programs that service providers like Verizon and Sprint are charging for--along with the difficulty of getting email from multiple sources--is another reason that the uptake of smart phones might not be smooth.

The simple fact of the matter is that the transition from the handset to the smart phone is going to be a sloppy one. What we want from a smart phone is still expensive and does not work the way we would like. This sloppiness will continue spilling over into Motorola’s stock as the transition from the handset to the smart phone continues.

No need to jump into this stock yet. Wait for Motorola to provide clarity on smart phones acceptance and this will be the signal that Motorola finally has a grip on the transition process.