Motorola Sees Lower Revenue in 4Q - Analyst Blog

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Motorola Mobility Holdings Inc. (MMI) expects sales for the fourth quarter of 2011 to be $3.4 billion, down as compared with the Zacks Consensus Estimate of $3.9 billion. Such defensive outlook for the company is mainly driven by weak smartphone sales and higher cost regarding patent related lawsuits.

During the last quarter of 2011, the company shipped nearly 10.5 million handsets (inclusive 5.3 million smartphones) versus 11.6 million mobile handsets (including 4.8 million smartphones) in the third quarter of fiscal 2011.

Motorola Mobility's smartphone sales were largely affected by the Apple Inc '.s ( AAPL ) newly launched iPhone 4S and Samsung Electronics Galaxy S 2. The industry analysts predicted that Samsung had already sold nearly 32 million smartphones followed by Apple's 30.5 million iPhones during the last quarter of fiscal 2011.

Currently, the company holds huge patent portfolio mainly related to mobile handsets. Therefore, we believe that the company will continue to remain entangled with several lawsuits in the near future. The company is already into a legal tussle with some big players, such as Apple and Microsoft Corporation ( MSFT ).

Huge 4G-enabled handsets and tablets portfolio coupled with the recent merger agreement with Google Inc. ( GOOG ) will act as positive catalysts for the stock going forward. However, stiff competition from other smartphone manufacturers and lack of product differentiations will act as impediment for the stock in the near term. We, thus, maintain our long-term Neutral recommendation on Motorola Mobility Holdings Inc.

Currently, Motorola Mobility Holdings Inc. has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

Earlier in 2011, Google entered into an agreement to acquire Motorola Mobility for $12.5 billion, subject to regulatory approvals. The deal is expected to get closed by the first half of 2012.

Motorola Mobility Holdings Inc., based in Libertyville, Illinois, is a leading mobile phone and smartphone manufacturer. Moreover, the company is one of the leaders in the set-top box category.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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