Motorola: Will It Shut Down The Phone Business?

Is Motorola (MOT) going to simply shut down its ailing phone business? Charter Equity Research analyst Ed Snyder raised that question in a report late Tuesday in which he downgraded his rating on the stock to Market Underperform from Market Perform. Snyder notes that “history suggests turnarounds are more difficult than exits.” He says the company will keep downsizing the mobile devices business until it “coalesces around a small profitable product core or disappears.” Snyder says the company could shrink down  to a vendor of phones for Sprint ’s iDEN network, a market he says is profitable for the company, but which only amounts to 3 million phones a quarter. Snyder contends that “Motorola’s fortune in phones is precisely predicted by the decline and fall of the handset divisions of both Ericsson (ERIC) and Siemens earlier this decade.” He notes that Siemens eventually saw its phone operations shut down after selling them to BenQ. ... (link)