Motorola raised to 'neutral' ahead of Droid X debut

Motorola Inc. was raised to "neutral" from "sell' by MKM Partners, which said the Droid X phone, set to go on sale tomorrow at Verizon Wireless, may help the handset maker gain ground on rivals.

The new phone could boost Motorola's sales amid HTC Corp.'s supply problems and Apple Inc.'s reported iPhone signal flaws, MKM analyst Tero Kuittinen wrote in a note today.

Motorola, trailing Apple in smartphone sales, is counting on the Droid X to be a "workhorse" in driving sales, co-Chief Executive Officer Sanjay Jha said in an interview last month. The first Droid, introduced in November, has become the top- selling device based on Google Inc.'s Android software.

"The launches of the Droid X and Droid 2, combined with ongoing shortages of key HTC models and growing iPhone controversy, are opening a window for Motorola to solidify its position as the premier Droid supplier for Verizon," said Kuittinen, who's based in Greenwich, Connecticut.

The Droid X will go on sale tomorrow for $199.99 on a two- year contract at Verizon's stores and website, Motorola said in a statement today.

Motorola, based Schaumburg, rose 25 cents to $7.46 at 11:10 a.m. in New York Stock Exchange composite trading. Apple, based in Cupertino, California, climbed $1.91 to $253.71 in Nasdaq Stock Market trading.

Apple declined yesterday after Consumer Reports said tests on its latest iPhone 4 confirmed the device has a hardware flaw that can diminish signal strength if held in a certain way. The report is spurring speculation that the handset may be recalled.

Such problems are "likely to push fence-sitters already worry about AT&T's quality into the Droid camp," Kuittinen said.