Thursday, January 19, 2006

Moto Smashes Earnings

Raise the roof, people.

Motorola (MOT) just blew away earnings.

Sales were up 18 percent in the last quarter after Moto shipped close to 50 million units.

We hope you were listening when we coaxed you to buy shares last December and then again in early January:

....Wireless handset maker Motorola is back on track and CEO Ed Zander's picture should emblazon every corner of Wall Street this Christmas.

Shares of Illinois-based Motorola are up 60% since "turnaround artist" Zander took the helm at the world's third largest cell phone maker.

....the Oklahoma land rush for Motorola's ultra-thin razR phone (made of aircraft-grade aluminum) is what awoke Motorola from its coma, but the Motorola story is ultimately an Ed Zander story. Zander's the reason Motorola went from a being an on-the-defensive laggard to a larger-than-life force that's simultaneously got cell phone aficionados salivating for the next Motorola product launch and rival Nokia (NOK) shaking in its Swedish boots.

The bears think that Motorola could soon face the pangs of commoditization and that shares of are richly valued. We disagree. Trading at less than 2 X sales and just 14 X earnings (industry trades at 25 X current EPS), Motorola still holds an attractive valuation.

In a world where fashion and cellular technology are indistinguishable, Moto's king -- they are trimming/restructuring/downsizing and implementing new revenue drivers. We see shares of Motorola easily breaking $30 in 2006.

Shares are down in the after market.

We'll wait until after the 5PM conference call before we fire another salvo.

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