Samsung's Strong Q4 More Bad News For Motorola (MOT)

Samsung posted solid Q4 mobile phone sales Tuesday: The Korean electronics giant sold 46.3 million phones last quarter, up 41% year-over year, and slightly better than the Street consensus 46 million. The company expects to do even better this quarter, projecting sequential growth when the industry normally declines from the holiday shopping-fuelled fourth quarter.

If the company can deliver, that’s obviously great news for Samsung. But it’s lousy news for rival Motorola, which still hasn’t found a phone that can follow the hit Razr. In a note Tuesday, Citigroup analyst Jim Suva says Samsung’s results suggest things are only getting tougher for Motorola (MOT). He pegs Samsung’s global mobile phone market share at 14.5% in 2007, up from 12.1% in 2006 — displacing Motorola for second place behind Nokia (NOK).

We think Samsung’s plan to double the number of 3G offerings in 2008 will also make it more difficult for Motorola to gain back share in Europe. Additionally, the success of high-end products such as the Samsung Ultra and the company’s 5 megapixel camera phone offerings raise the bar for Motorola, whose latest high-end phones (such as the Z-10) only offers a 3.2 megapixel camera.

And Suva says Samsung’s success should only breed… more success.

Lastly, we note Samsung’s strong operating margins of 10.8% in 4Q and operating margins in excess of 10% for the year should allow Samsung to increase marketing and R&D efforts, potentially putting further distance between Samsung and Motorola.

Motorola reports Q4 results Wednesday morning, Jan. 23.

See Also: Citi: Motorola Missed Christmas, RIM Rules

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