Motorola's Funeral Canceled: On Slow Road To Recovery, Says Citi (MOT)

A ray of light for Motorola (MOT) shareholders: The worst is probably over, Citigroup analyst Jim Suva predicts.  After losing 75% of their value from September, 2006 to July, 2008, Motorola shares have started to recover. And with big cost cuts, a new CEO, and an aggressive product roadmap, the company’s mobile phone division could be in the early stages of “a gradual steady improvement,” Suva hopes in a note today.

Specifically, Suva is excited about an accelerated product release schedule — 34 launches scheduled for the second half versus 14 launched in the first half — which he says sets the stage for a stronger 2009. And he thinks the company’s recent hiring of former Qualcomm (QCOM) no. 2 Sanjay Jha — and his background in wireless chips and software — could be “the tonic for Motorola’s ills.”

“We believe the ‘consistent inconsistency’ of engineering/product delays that plagued MOT will not reoccur with Dr. Jha,” Suva says.

Most important: Motorola does not need an Apple (AAPL) iPhone-killer to recover, he argues. While the company must ramp up its smartphone business — the smartphone market is growing much faster than the overall mobile phone market, and selling expensive smartphones is more profitable than cheapo phones — betting big on a massive hit is a losing proposition.

What does it need? Lots of new products, Suva says. Why? “Successful products in the industry aren’t quite random, but they are somewhat fickle.” Meaning: the more phones Motorola releases, the better the chance one will take off on its own.

Suva is right. While it’s nice to have a star — like Motorola’s had the StarTAC and the RAZR — you can’t bet on it. See Nokia (NOK), which has never really had a single, brand-defining phone, but has consistently led the world’s mobile phone market, built out a remarkable worldwide sales and distribution infrastructure, and, more important, made a solid, steady profit.

Meanwhile, a reminder of the last two years for MOT owners:

See Also:
Motorola’s New mobile phone CEO: No Big Product Changes For A Year
Motorola Hires New mobile phone CEO: Qualcomm’s Sanjay Jha
T-Mobile Wakes Up, Stops Trying To Compete With iPhone
Motorola Q2 Sales Beat Street, Breaks Even, Spinoff On Track For Q3 2009

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