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

Previous Posts

Tuesday, August 22, 2006

The Shorts Chase Motorola

Stocks: (MOT)

Short interest in Motorola rose 233% in August compared to July to 54 million shares. At about $24 a share, that is a pretty big bet.

Motorola has had a tremendous run on the strength of strong earnings and the belief that cell phone sales, key to its success, will continue to rise.

Motorola's stock was under $15 in April of 2005 and now trades near a 52-week high at nearly $24.

The bet against Motorola is likely based on one of two things. The first is that the cell phone market will not grow as fast as expected. In countries like China, mobile use is still skyrocketing. China Mobile, the largest cell company in the world's most populous country added 26 million new subscribers and now has 274 million total customers.

The other potential bet against Motorola is that the company's new ROKR phone, which will play Apple iTunes content, will not be a success and that its popular RAZR phone sales will slow. Motorola is also making a huge bet on its super-thin Motofone which is aimed, in large part, at the Chinese and Indian markets.

Motorola has confounded critics before, so the bet by the shorts is a risky one.

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

Powered by Blogger