Wednesday, November 21, 2007

Goodbye, Moto

From yesterday's MSN Money:

Like the song says, "some say love it is a Razr that leaves your soul to bleed." Well my soul has bleed out waiting for Motorola's stock to turn around. I can't wait any longer -- I'm not Job after all.

Motorola has been screwing up for so long, it even gets it wrong when it gets it right. Last quarter the company delivered another lousy set of sales and earnings numbers, yet it guided fiscal fourth-quarter earnings to a range of 13 to 14 cents a share -- a few pennies above The Street's consensus. Normally, guiding estimates higher would be perceived as a good thing -- and it was at first as the stock edged higher on the news. However, in offering up hope for the fourth quarter and the upcoming year, CEO Ed Zander might have won himself a new contract -- and that's bad news.

You see one of the reasons I bought Motorola's stock down at its lows was in anticipation of a new management team. Typically when a struggling company finally ousts its old CEO in favor of someone new and full of promise, the underlying stock tends to rally. Until recently, Zander's ouster was all but certain. But in light of the company's modest progress off a terrible set of numbers, Zander might just hang around. Let's face it he did take all the credit for the Razr so there might be a board member or two who thinks he's on the verge of another one-hit wonder.
Now I don't know if the new CEO would be Motorola's own Greg Brown (current President and COO) or an outsider like former Qwest CEO Dick Notebaert and frankly I don't much care -- it's just at the point where anyone but Zander will do. Isn't there a young Galvin kid somewhere looking to reestablish the family name?

Without a change at the top, Motorola's stock will be stuck at the bottom. It was the one big catalyst we needed for the stock to make a run back into the low $20s. The Razr2 sure as heck isn't the answer to our turnaround prayers. Granted sales have been a little better than expected, but the price is still too high, the functionality is hit -or-miss and the design has lost its cool factor. And don't even get me started on the Q. Motorola's answer to the smart phone craze was put to shame by Apple's iPhone and Research-in-Motion's BlackBerry Pearl. Motorola can't give the phone away -- though it has tried hard, which helps to explain the company's declining margins.

So after waiting and waiting, I wait no more. Goodbye Moto.

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