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Motorola: Bad 4th Quarter Signals Stock Downgrade

Friday, 5 Jan 2007 | 11:19 AM ET

Bad news from--and for Motorola today. The company announces poor fourth quarter expectations this morning--lowering its earnings and sales guidance. The cuts come as a result of shortfalls in its mobile devices unit. That news lead to downgrades by six analysts this morning. The stock is trading down nearly 8% in mid-day trading as a result. There was one analyst who may have seen this coming. He downgraded Motorola three weeks ago. He's Matthew Hoffman--managing director and senior research analyst at Cowen and Company. He spoke by phone on "Morning Call."

Motorola Trading Lower
Motorola's stock is trading sharply lower after it cut its earnings guidance. Matthew Hoffman, Cowen & Co. Managing Director, and CNBC's Michelle Caruso-Cabrera discuss the company.

Hoffman says Motorola has had trouble finding a successor to its popular Razr cell phone. Couple that with a slowing market in general for cell-phones in the U.S. and that spells trouble for the tech-communications company.

As for emerging markets--Hoffman says Nokia is a doing a bit better there because it makes its own phones--whereas Motorola outsources the manufacturing of phones to emerging markets and that cuts into its profit margins.

Hoffman says he wants to wait longer before he would buy into Motorola right now--he want the eps for Motorola to go lower that it is now.

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