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Jan. 20 (Bloomberg) -- Shares of Motorola Inc., the world's second-largest mobile-phone maker, may fall after revenue at the company's main handset unit disappointed investors.
Motorola yesterday reported it made less per handset sold in the fourth quarter and said it couldn't meet demand because of difficulties getting components for some new models. Total sales rose 18 percent to $10.4 billion, missing an estimate for $10.6 billion by JPMorgan Chase & Co. analyst Ehud Gelblum.
``It doesn't leave much to hang your hat on,'' said Paul Sagawa, an analyst with Sanford Bernstein & Co. in New York who rates the shares ``market perform.'' He said the supply issues will result in lost business.
The sales shortfall added to concern about growth at technology companies including Intel Corp. and Apple Computer Inc. following their quarterly reports this week. Motorola, based in Schaumburg, Illinois, said supply constraints won't affect sales this quarter as it introduces new phones in the U.S.
The shares fell $1.06, or 4.4 percent, to $23.29 as of 7:59 p.m. in extended trading yesterday after they closed at $24.35 on the New York Stock Exchange. The stock gained 31 percent in 2005.
Fourth-quarter net income almost doubled to $1.2 billion, or 47 cents a share, from $647 million, or 26 cents, a year earlier, Motorola said yesterday. Profit excluding some items was 35 cents, exceeding Gelblum's estimate by 1 cent.
While profit beat estimates, an operating margin of 10.2 percent at the mobile devices unit lagged the 11.5 percent prediction of Gelblum, who is based in New York and has an ``overweight'' rating on Motorola. Razr sales helped boost shipments 40 percent, while revenue gained 30 percent.
New Razrs
Chief Executive Officer Edward Zander added pink and blue models of the metal-clad Razr phone in November to help preserve the hip reputation that Motorola regained after the Razr's introduction in late 2004. The company shipped a record 13 million phones from the Razr family in the fourth quarter.
Motorola forecast first-quarter sales of $9.3 billion to $9.5 billion. Analysts surveyed by Thomson Financial estimate $9.35 billion, according to the average of 26 estimates.
``We will sell more Razrs in 2006,'' said Ron Garriques, who runs the mobile devices business. ``The products we have already launched will give us additional growth in the first quarter.''
The devices unit had revenue of $6.5 billion in the fourth quarter and an operating profit of $663 million. The Pebl and Slvr phones, offspring of the Razr model, went on sale in some markets outside the U.S. during the fourth quarter and will be introduced in U.S. markets this period, along with the Q model.
Motorola and larger competitor Nokia Oyj, which reports earnings next week, are tapping demand in India and China. The new Razr models, which sell for about $300 on Motorola's Web site, help offset lower prices in emerging markets.
Demand for lower-priced phones in emerging markets may be accelerating a decline in average selling prices. Worldwide cell phone revenue will slip 4.7 percent to $109.7 billion in 2006 as saturation in the U.S. and Japan slows handset sales, according to El Segundo, California-based ISuppli Corp.
To contact the reporter on this story:
Rebecca Barr in New York at rbarr1@bloomberg.net.
Last Updated: January 20, 2006 01:53 EST
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