CIBC sees more trouble at Motorola

Here is a quick soundbite from CIBC World Market’s equity research department in New York and California. Things are not getting any better in the Moto handset world by the sounds of it:

“After a round of meetings in Asia with supply chain members, we believe Motorola is experiencing stronger than expected weakness in just about every area of its handset operation. We are lowering our 1Q07 handset
shipment targets from 56M to 52M, reflecting a 20.9% QoQ decline.

We are growing increasingly skeptical of MOT’s ability to deliver on its 2H07 double digit handset operating margin. Our checks suggest the SCLP could be delayed from late 1Q/early 2Q to late 2Q and we believe new 3G models are not expected to deliver in volume through 3Q07.

We believe shipments could fall more than 20% sequentially with weakness across most areas. Our checks show softness for the core RAZR and that newer products (KRZR and RIZR) are yet to gain traction. The low end is weak with MOTOFONE shipments possibly cut in half from 4Q06.

We are adjusting our 1Q07 estimates to revenue of $9.7B and earnings of $0.15 per share from $10.3B and $0.19; our 2007 estimates to $44.1B and $1.01 from $46.8B and $1.16; and our 2008 estimates to $48.4B and $1.33 from $50.2B and $1.54. We remain neutral on MOT’s shares.”

MRM