Motorola Seen Topping 2Q Views On Handset Strength
NEW YORK -(Dow Jones)- Many believe Motorola Inc. (MOT) will exceed Wall Street forecasts for the second quarter, as it continues to see strength in handset sales, bolstered by market share gains against its rivals.
Analysts polled by Thomson First Call, on average, expect the company to report second-quarter earnings of 25 cents a share Tuesday after the bell.
Whispernumber.com, however, has earnings pegged at 29 cents a share. The Web site generates its projection by taking the average from various estimates submitted by individual investors who are logged on to the site.
Motorola's sales remain robust, led by the hip RAZR, which is still a hot item - particularly in Europe and Asia. The overseas business, as well as new product entries at the lower-end level, helped overshadow lower average selling prices and the negative effects of a rising dollar.
"The global wireless handset market continues the vibrant growth observed in 2004, with Motorola delivering consistent strong execution, with well-designed new products and improving economics," said Paul Sagawa, an analyst with Bernstein & Co. The analyst doesn't have any conflicts of interests to report.
While Nokia Corp. (NOK) retains its top position in the handset market, Motorola, of Schaumburg, Ill., is taking business away from LG Electronics Inc. (066570.SE), Sony Ericsson and Siemens AG (SI), Sagawa said in a note, adding that Sony Ericsson and LG are competing with aging product portfolios. He added the company may have strengthened its lead in North America through a resurgence in phones used for Verizon Communications' (VZ) wireless service. The analyst doesn't have any conflicts of interest to report.
Still, many will look closely at average selling prices, especially as Motorola ramps up production of cheaper phones for emerging markets. An initial shipment of $40 phones may weigh on prices for the second quarter.
In Motorola's other segments, Lehman Brothers analyst Tim Luke said the company's large corporate and government broadband businesses should be in line with expectations, but that its automotive components division will continue to be weak.
Also on the radar is the line-up for phones for the holiday period, which includes one model that ties into Apple Computer Inc.'s (AAPL) iTunes program. Motorola is expected to offer a bullish outlook for the second half, based on the continued handset trends, Luke said in a note. The analyst has no conflicts of interest to report.
While there is a lot of optimism surrounding the quarter, it's uncertain whether the stock price will react in kind. Some note that the expectations have been priced into its share price.
A Motorola spokeswoman declined to comment, saying the company was in its quiet period.
Motorola shares recently traded down 11 cents, or 0.6%, at $19.39.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 18th July 2005