Discouraging Motorola Xoom Sales Could be a Drag on Stock

-43.45%
Downside
37.42
Market
21.16
Trefis
MMI: Motorola Mobility logo
MMI
Motorola Mobility

According to one Global Equities’ analyst, Motorola Mobility (NYSE:MMI) likely sold between 25,000 and 125,000 Xoom tablets since the company began offering the product on February 24th. [1] Analysts from Sanford Bernstein and Deutsche Bank have also estimated low numbers for Xoom. [2] This is unwelcome news for Motorola as Xoom tablets account for 20% of our $25.45 price estimate for Motorola Mobility stock. Motorola Mobility faces stiff competition from Apple’s (NASDAQ:AAPL) iPad, Research in Motion’s (NASDAQ:RIMM) PlayBook, and other products from companies like Samsung, Dell (NASDAQ:DELL) and LG.

Our price estimate for Motorola Mobility, at $25.45, is about 5-10% above market price.

Slow Start for Motorola Xoom

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Although Xoom sales were never expected to match the early success of the Apple’s original iPad, the magnitude of the difference is worth noting. Apple sold around 1 million iPads in the first weekend of its launch last year; Xoom estimates suggest 25,000 to 125,000 sold since its February 24 launch. [1] A product’s launch is very important, as sales typically spike due to the build up of pre-launch anticipation.

We expect Motorola Mobility to sell around 4 million Xoom tablets in 2011. However, after a tepid start, Motorola might not be able to achieve this target. You can examine the downside impact to Motorola Mobility’s stock value from fewer Xoom sales by dragging the trend line in the interactive chart above.

See our complete analysis of Motorola Mobility stock here

Notes:
  1. CNN Money Fortune quoting Global Equities as source, April 25th 2011 [] []
  2. Cnet News citing Sanford Bernstein and Deutsche Bank as the source, April 25th 2011 []