What Bionic, Xoom LTE Delays Mean for Motorola Mobility
Motorola Mobility's (MMI) share of the mobile phone market has been in free fall for the last few years, and it continues to face stiff competition from Apple (AAPL), Research in Motion (RIMM) and Nokia (NOK). During its recent earnings announcement, Motorola Mobility mentioned that some products it had scheduled for launch in the second quarter will now be rolled out over the summer, including its Droid Bionic smartphone and the Xoom LTE tablet. These slight setbacks could be a problem for a company already trying to play catch up.
Since 2006, when the RAZR hit its peak of popularity and helped push Motorola to a 22% mobile phone market share, Motorola Mobility's market share has been whittled down: In 2010, it was around 2.5%.
Recently, Motorola Mobility has tried to step up its game by launching new smartphone models more frequently. The more-rapid pace is intended to help it to bring out better designs, and remain on top of new developments and features in the smartphone market. Time-to-market is an important parameter for the smartphone industry, which is constantly evolving.
However, Motorola Mobility's pace of new smartphone introductions has slackened: It rolled out only two new models in the last quarter. That, combined with the delays of Droid Bionic and Xoom LTE, does not send a positive signal. In its press release, management stated "...with the delay of BIONIC from the second quarter to this summer, we know that the execution needs to get better. ... The execution flaw was an aberration rather than a course of business."
While we can give management the benefit of the doubt this time around, analysts will be keen to see if the company delivers on its revised schedule.
We currently maintain $24.59 price estimate for Motorola Mobility stock, roughly in line with market price.Trefis Wordpress Plugin.