Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Thursday, July 20, 2006

Widely Traded 48 Hour Clock: MOT and QCOM, Which Way For Cells

Stocks: (MOT)(QCOM)

Motorola and Qualcomm got markedly different reactions to their earnings reports. Motorola's stock rose over 8% in after hours trading to $20.84. Qualcomm's shares fell 5% to $34.91, below the company;s 52-week low.

It makes one wonder where the cell phone market is heading.

Qualcomm had a good quarter. Revenue rose to $1.951 billion from $1.358 in the same quarter last year. Operating income growth was far less robust going from $560 million last year to $704 million in the recent quarter.

Guidance for the current quarter was a bit rough. Revenue could be as low as $1.88 billion, a 21% increase over last year and EPS could rise as little at 3%. Handset sales shipped are expected to be as low as 67 million units in the current quarter compared to 48 million last year. The average selling price per handset is expected to be flat around $215.

Because Qualcomm is the clear leader in digital wireless products based on CDMA, its is as close as investors can get to a proxy for cell sales.

Or is it?

Motorola's sales in the last quarter were up 29% to $10.88 billion. Cell handset shipments hit 51.9 million. These unit sales were up 53% over the same quarter last year and up 12.4% compared to the immediately previous quarter. Mobile device revenue at Motorola was up 46% over last year, which means all other segments of the company's business lagged.

Guidance was for revenue in the current quarter to be up as much as 23% over last year to $11.1 billion with mobile devices being the primary driver.

Two companies. Closely related business. Opposite reactions in the stock market. It raises the question of where the cell market is headed.

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

Powered by Blogger