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Wednesday, July 19, 2006

Widely Held 48 Hour Clock: Motorola, Beyond Cell Phones

Stocks: (MOT)(NOK)

The anticipation around Motorola earnings centers around cell phone sales, particularly the popular Razr model. Wall Street has been trying to read the tea leaves from companies like Samsung and Nokia to get a fix on whether global cell sales are slowing or not.

Although the fate of Motorola's stock will be determined to some extent by phone sales, there are other parts of the business that will weigh on whether the shares move up or down.

In the quarter ending April 1, mobile devices were pver 60% of total revenue at the company and grew at a rate of 45% over the same quarter in 2005. But, businesses totaling almost $3.7 billion in the quarter are growing at slow pace. These include the government mobility business, the network business and home solutions. Revenue in the network business actually fell 14% compared to the previous year, and operating income in the unit slid 44%. Operating income also dropped in the home solutions unit.

If Motorola continues to be a "one trick pony", it reliance on cellular product will eventually come back to bite the company. It can't carry the stock forever.

Douglas A. McIntyre can be reached at He does not own securities in the companies that he writes about.

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