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Monday, July 24, 2006

Widely Held 48 Hour Clock: Motorola's Silly Buyback

Stocks: (ALA)(LU)(NT)(SI)(NOK)(MOT)

Turn in great results. Watch your stock go up. Buyback your shares.

Funny order to this.

At $21.45, Motorola is moving back toward its 52-week high of $24.99. The company shipped 51 million phones in the last quarter, and investors applauded the quarterly report moving the stock from just above $19 to almost $22. Now, the company wants to increase its share repurchase increasing its previous commitment to the current plan by $4.5 billion.

Motorola has cash, short term investments, and Sigma funds on the balance sheet total $14.2 billion. Long term debt is $3.7 billion.

Motorola is being outflanked by mergers like the Siemens/Nokia tie-up. The telecom equipment market is going to be driven by giant alliance like this. Analysts estimate that Siemens can also save $1.5 billion in the process of linking up with Nokia. The Alcatel purchase of Lucent was driven by the same metrics. Scale and cost savings. And, Nortel is very cheap now.

Motorola need to look for a partner in its enterprise equipment business unless it wants to be beaten by rivals. Having a strong handset business with a hot product like Razr is not enough. Not if the company wants to stay near its 52-week high.

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

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