Smartphone Delays a Slight Setback for Motorola Mobility

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Motorola Mobility

Motorola Mobility’s (NYSE:MMI) mobile phone market share has been in free fall over the last few years, and continues to face stiff competition from Apple (NASDAQ:AAPL), Research in Motion (NASDAQ:RIMM) and Nokia (NYSE:NOK) in this market. During its recent earnings announcement, Motorola Mobility mentioned that some of its products scheduled for Q2 2011 will now be rolled out over the summer, including its Droid Bionic smartphone and Xoom LTE version of the tablet. [1] This is a slight set back for a company trying to play catch up in the smartphone market.

Motorola Mobility’s declining market share..

Since 2006 which saw the peak of the RAZR phone and 22% mobile phone market share, Motorola Mobility’s market share has been whittled down to around 2.5% in 2010. Recently, Motorola Mobility has tried to step up its mobile phone game by launching a handful of smartphones models more frequently.

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This rapid introduction helps it in bringing out better designs and features and remain on top of new developments in the smartphone market. The time-to-market is an important parameter for the smartphone industry, which is constantly evolving.

However, the pace of new smartphones introduced by Motorola Mobility have declined and it rolled out only two new smartphones in the last quarter. [2] With the delay of Droid Bionic and Xoom LTE, this does not send a positive signal. In its release, management stated “with the delay of BIONIC from the second quarter to this summer, we know that the execution needs to get better.” It added, “The execution flaw was an aberration rather than a course of business.” [3]

While we can give management the benefit of the doubt this time around, analysts will be keen to see if the company delivers on its revised schedule.

We currently maintain $24.59 price estimate for Motorola Mobility stock, roughly in line with market price.

See our complete analysis for Motorola Mobility stock here.

Notes:
  1. Motorola Mobility Q1 2011 earnings conference call transcript, April 28th 2011 []
  2. Motorola Mobility Q1 2011 earnings conference call transcript, April 28th 2011 []
  3. Motorola Mobility Q1 2011 earnings conference call transcript, April 28th 2011 []