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|Motorola Mobility Holdings Inc. |(MMI-NYSE) |$38.81 |

This report contains substantially new material. Subsequent reports will have new or revised material highlighted.

Reason for Report: FLASH UPDATE: 1Q12 Earnings Update; meets expectations

Prev. Ed.: April 3, 2012; 4Q11 Earnings Update (brokers’ material considered till February 24, 2012)

Flash News Update [Note: earnings update in progress; final report to follow]

On May1, 2012, MMI reported its 1Q12 earning results. Quarterly GAAP net loss was $86 million or $0.28 per share compared with a net profit of $81 million or $0.27 per share in the prior-year quarter. Pro forma net loss in the reported quarter was $0.18, which was in line with the Zacks Consensus Estimate. Total revenue in the quarter was $3,078 million, up 1.5% year over year and was above the Zacks Consensus Estimate of $2,929 million.

Gross margin in the reported quarter was 24.5% compared with 24.9% in the prior-year quarter. Quarterly operating loss was $70 million compared with an operating income of $36 million in the year-ago quarter.

During the first quarter of fiscal 2012, Motorola Mobility’s cash flow from operations was negative $98 million compared with $107 million in the prior-year quarter. Free cash flow (cash flow from operations less capital expenditure) during the reported quarter was a negative $131 million compared with $57 million in the previous-year quarter. Cash and cash equivalents at the end of 1Q12 was $3,332 million compared with 3,116 million in the previous quarter. The company had no debt on its balance sheet in the quarter.

Portfolio Manager Executive Summary

Motorola Mobility Holdings Inc. (MMI), based in Libertyville, Illinois, is a leading mobile phone and smartphone manufacturer. Motorola Mobility also designs, manufactures, and installs digital video, IP video and broadcast network interactive set-top boxes, as well as voice and data related customer premises equipment primarily for the cable TV industry. The company’s converged mobile devices including smartphones and tablets are based on Android operating system. Additionally, the company develops Bluetooth accessories. Motorola Mobility came into existence after the spin off from its parent company Motorola Inc on January 4, 2011. After the separation, the company is primarily targeting the retail customer segment for its future growth. Motorola Mobility provides advanced mobile media solutions and multi-screen technologies based on the converged platform of seamless mobility, end-to-end video content delivery capabilities, and the Internet.

On August 15, 2011, Motorola Mobility Holdings Inc. announced that it has entered into a definitive agreement with Google Inc, under which the latter will acquire 100% stake of Motorola Mobility for $40 per share in cash or a total consideration of approximately $12.5 billion.

Key factors for evaluating an investment in MMI shares are as follows:

• Motorola Mobility is a leading manufacturer of smartphones and tablets based on Android operating system. Android currently holds more than 50% market share in the lucrative North American mobile devices markets.

• Smartphones and tablets have become the ultimate next-generation choice. The global demands for these converged mobile devices are expected to increase significantly in the near future.

• Motorola Mobility is expected to launch its innovative smartphones and tablets capable of supporting super fast 4G LTE (Long-Term Evolution) network in the third quarter of 2011.

• The mobile devices market is getting intensely competitive. In addition to formidable players such as Apple Inc (APPL), Research In Motion (RIMM), Nokia (NOK), and Samsung, other low-cost Asian manufacturers are flocking the market.

Analysts’ Opinions: Of the analysts in the Digest Group covering the stock, 82.4% adopted a neutral stance, 5.9% rendered positive ratings while the remaining 11.8% were negative on the stock. Target prices range from a low of $34.00 to a high of $40.00, with the average at $39.36. The average expected return over the current share price is 0.8%.

Positive (Buy or equivalent ratings) – 1 analyst or 5.8%: The target price stood at $40.00. The analysts with a bullish outlook believe that the launch of new LTE-based devices in the upcoming quarters will drive the stock upward.

Neutral (Hold or equivalent ratings) – 14 analyst or 82.4%: The target price ranges from $34.00–$40.00. Despite strong fundamentals and continuous product launch, these analysts prefer to remain on the sidelines till the completion of the Google and MMI deal. These analysts also believe that the company will face huge competitive pressure from other smartphone/tablet manufacturers. Despite higher handset sales these analysts expect profitability to decline going forward.

Negative (Sell or equivalent ratings) – 2 analyst or 11.8%: The target price ranges from $34.00–$40.00. Continuous loss of market share coupled with sluggish smartphone sales induced the analysts to hold a bearish sentiment on the stock.

November 9, 2011

Overview

Motorola Mobility Holdings, Inc. (MMI), based in Libertyville, Illinois, is a leading provider of a broad range of mobile and wireline, digital communication, information and entertainment services and products. The company’s integrated products deliver rich multimedia content, such as voice, video, messaging and Internet-based applications and services to mobile devices, televisions and personal computers.

Motorola Mobility Holdings reports its financial results in two segments:

Mobile Devices Segment: This segment manufactures mobile wireless devices and related products and services. Mobile devices include feature phones, smartphones, and tablets. Although the smartphones and tablets are based on third-party Android operating system, MMI differentiate its products through its proprietary applications and services software suite, MOTOBLUR. The company enhanced its software ecosystem using MotoDEV developer network for application development. This segment accounts for nearly 70% of the total revenue of Motorola Mobility.

Home Segment: This segment provides innovative video entertainment services to consumers by allowing access to a variety of interactive digital television services. Home segment caters to the cable and wireline telecommunications operators for delivering voice, video and high-speed data services. This segment generates the remaining 30% of the total revenue of the company.

The battle for supremacy in the smartphone market has resulted in speedy product upgrade and innovative offer plans. Smartphones are gradually grabbing significant market share from basic mobile handsets due to its immense popularity among the next-generation. This lucrative market opportunity has attracted a lot of players, some of which are having natural low-cost structure. In addition to traditional competitors like Apple, Research in Motion, and Nokia, Motorola Mobility is now competing heavily with Asian giants like Samsung and HTC. The company’s website is .

Key investment considerations as identified by the analysts are as follows:

|Key Positive Arguments |Key Negative Arguments |

|Motorola Mobility is a leading manufacturer of communications systems |A major near-term concern for Motorola Mobility is Apple’s decision to start |

|and services across the world. This includes several pocket digital |selling its iconic iPhone 4 through Verizon Wireless from February 2011. Verizon|

|assistance and entertainment devices for the home. |was previously the largest carrier partner of Motorola Mobility. Since Verizon |

| |has shifted to Apple’s iPhone, we believe Motorola Mobility may not get the same|

|Motorola Mobility operates in the lucrative high end mobile devices |kind of carrier promotion from Verizon. |

|market. Smartphones and tablets are expected to grow at a CAGR of | |

|28%-30% over the next three years. This will provide meaningful top-line|Motorola Mobility has deferred its maiden 4G DROID BIONIC smartphone with |

|growth opportunity for the company. |Verizon by a quarter. This device was expected to be launched during the second |

| |quarter of 2011. Management received quite a few negative feedbacks regarding |

|Motorola Mobility has always been known for its ability to innovate and |the device and wants to improve it further. |

|the timely introduction of quality products is driving revenue growth in| |

|the conveged mobile devices market. |Motorola Mobility is currently engaged in a legal battle with Microsoft Corp. In|

| |October 2010, Microsoft sued Motorola for infringing nine of its patent in |

|Motorola Mobility is gradually expanding its presence within the |Android-based smartphones. Motorola Mobility filed a counter legal suite against|

|established wireless carriers of Europe, Asia, and Latin America. This |Microsoft accusing it of infringing 16 of Motorola Mobility’s software patents. |

|diversification will help the company to compensate losses in the North |We believe legal battles will result in drainage of cash from Motorola |

|American markets. |Mobility’s balance sheet. |

| | |

|Post spin off, Motorola Mobility has emerged as a de-leveraged company. |Motorola Mobility faces the risk of commoditization if the company fails to |

|The company has around $3.2 billion of cash and short-term investment |effectively differentiate its smartphones from other developers that uses |

|and no debt. During the first two years after separation, Motorola |Android software. |

|Mobility will receive an additional $300 million of cash infusion from | |

|Motorola Solutions following its receipt of funds from international | |

|subsidiaries. | |

Note: MMI’s fiscal references coincide with the calendar year.

November 9, 2011

Long-Term Growth

The long-term EPS growth rates for NOK range from 15% to 20%. The Digest average long-term EPS growth rate is 17.5%.

Motorola Mobility will benefit from the significant market acceptance of Android as the next-generation 3G and 4G smartphone operating system. Motorola Mobility handsets feature an intuitive user interface and an efficient combination of Internet access, messaging, and multi-media applications based on the Android ecosystem. The major new innovation is the customized software interface called “MOTOBLUR”. This is a social-networking interface, through which Motorola Mobility attempts to differentiate its products from other smartphones. Currently, over 6,000 multimedia and social networking applications are available on the Android ecosystem. The company is trying hard to expand this platform using its proprietary MOTODEV program.

During the fourth quarter of 2010, Motorola Mobility shipped 11.3 million mobile phones including 4.9 million smartphones. This is a considerable improvement from 3.1 million shipped in the previous quarter. We believe this encouraging performance was mainly attributable to the solid growth of the company’s flagship DROID product.

In March 2011, Motorola Mobility launched its ATRIX smartphone with AT&T. This was the company’s first offering with AT&T. Management hinted that 4G LTE-enabled ATRIX will also be ready by the time AT&T will start deploying its LTE network. ATRIX contains innovative features like compatibility with laptop for business purpose and an HDTV connector for home computing and media playback. AT&T is expected to provide huge support to Motorola Mobility after Apple launched its legendary CDMA iPhone 4 along with arch rival Verizon Wireless. Additionally, Motorola Mobility launched CLIQ2 3G smartphone with T-Mobile USA.

Motorola Mobility launched its first tablet called “XOOM” in mid-February 2011. XOOM is the first device to run on Android 3.0 Honeycomb operating system, specifically designed by Google for tablets. XOOM can be later upgraded to 4G LTE network. XOOM directly competes with Apple’s iPAD, Samsung’s Galaxy Tab, and Research In Motion’s PlayBook in the worldwide tablet market. Most analysts believe that the bullish smartphone market will drive MMI’s customer base going forward.

A major near-term concern for Motorola Mobility is Apple’s decision to start selling its iconic iPhone 4 with Verizon Wireless from February 2011. Verizon was previously the largest carrier partner of Motorola Mobility. The company has provided a weak outlook for its core Mobile Devices segment. Although it did not specifically provide any figure for its first-quarter 2011 smartphone shipment, it did announce that the company is already started facing intense competition for Apple’s iPhone 4 from Verizon.

November 9, 2011

Target Price/Valuation

Provided below is a summary of target price and rating as compiled by Zacks Research Digest:

|Rating Distribution |

|Positive |5.8%↓ |

|Neutral |82.4%↑ |

|Negative |11.8%↑ |

|Avg. Target Price |$39.36↓ |

|Digest High |$40.00 |

|Digest Low |$34.00↓ |

|Analysts with Target Price/Total |14/17 |

According to analysts, risks to the achievement of price targets include highly volatile smartphone market, increased competition, and product differentiation. Further delay in the launch of 4G LTE capable products will also materially affect the company’s future financials. Motorola Mobility is currently engaged in a legal battle with Microsoft Corp. We believe legal battles may result in drainage of cash from Motorola Mobility’s balance sheet

November 9, 2011

Recent Events

On October 27, 2011, MMI announced its third quarter 2011 earnings results. Highlights for the quarter are as follows:

• Total revenue in 3Q11 was $3,259 million compared with $2,946 million in 3Q10 and also missed the Zacks Consensus Estimate of $3,376 million.

• Gross margin in 3Q11 was 25.9% compared with 26.8% in 3Q10.

• EPS on a GAAP basis in 3Q11 was ($0.11) compared with $0.12 in 3Q10 while Pro forma EPS in 3Q11 was ($0.12), wider than the Zacks Consensus Estimate of ($0.10).

On August 15, 2011, MMI entered into an agreement with Google Inc. (GOOG) to sell its stake to the latter for $12.5 billion or $40.00 per share in cash. However, the deal is subject to regulatory approval.

November 9, 2011

Revenue

Provided below is a summary of revenue projections as compiled by Zacks Digest:

|Revenue ($ in M) |3Q10A |

|Copy Editor |Nalak Das |

|Content Ed. |Nalak Das |

|No. of brokers reported/Total | |

|brokers | |

|Reason for Update |Flash |

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May 2, 2012

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