Motorola investors may not be sold on Razr 2
Motorola Inc.'s Greg Brown, in his first earnings report today as chief executive officer, may post disappointing sales of the Razr 2 phone after holiday shoppers flocked to Apple Inc.'s iPhone.
Motorola probably sold 2 million Razr 2s, the slim camera phones Brown is relying on to revive revenue, in the fourth quarter, said Lawrence Harris, a former Oppenheimer & Co. analyst in New York. Steve Jobs' Apple may have sold 2.4 million iPhones.
Harris estimated Motorola sold half as many Razr 2s over a similar period compared with the original model, whose 2004 debut started a craze for ever-thinner phones. Motorola, which fell to third place among global phone makers last year, may drop to fourth in 2008.
"The Razr 2 didn't set the world on fire and it won't be a phenomenon like the original one," Harris said.
Motorola, based in Schaumburg, may say today net income fell 59 percent to $257.9 million in the fourth quarter, according to the average of nine estimates compiled by Bloomberg. Sales probably slid 18 percent to $9.65 billion, the survey showed.
Jennifer Erickson, a spokeswoman for Motorola, declined to comment on sales or earnings before today's report.
Motorola shares dropped 22 percent last year on the New York Stock Exchange, while Apple more than doubled. Motorola fell $1.01, or 7.6 percent, to $12.32 Tuesday, the lowest in more than four years. The Standard & Poor's 500 Information Technology Index dropped 3.1 percent.
The 47-year-old Brown, who took over as CEO after Ed Zander's Nov. 30 resignation, has to improve marketing to show consumers the new phone is a step up, says Piper Jaffray & Co. analyst Michael Walkley. The $300 Razr 2 is too similar to the first, which is available for free with a contract, said Minneapolis-based Walkley, who called Razr 2 holiday sales "disappointing."
The Razr 2 is thinner, has a better camera and can store more songs than the original.
"The Razr 2 doesn't stand out the way the original did," said Brad Williams, who helps manage $11 billion as an analyst at MTB Investment Advisors in Baltimore. His firm sold its Motorola shares last year. "You go to a store and there are less-expensive products that look strikingly similar to the Razr 2."