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October 20, 2004

Motorola Reports

MOT reported earnings on Tuesday 10/19 after the close. Although I thought the quarter was fine and the fourth quarter outlook solid, the shares took a beating in Wednesday's trading. The Street still is giving MOT no respect despite what is now three straight good quarters. I'll be buying MOT shares for clients over the next few days.

Here is some more of my impressions on the quarter and the stock as reproduced from a post I contributed to StreetInsight.com....

Motorola Still Looks Good
10/20/04 10:06 AM EDT

I see nothing in Motorola's earnings report or guidance to change my bullish thesis. In fact, the continuing skepticism on the part of investors and analysts of another good result and in line guidance suggests that the shares still do not incorporate what is now an obviously successfully turnaround under the new management team.

MOT met consensus estimates for EPS and on just-barely-below consensus revenue. The guidance for 4Q placed the current consensus for both EPS and revenue right in the middle of the ranges. Some investors may have been disappointed that the guidance left open the possibility of a below-consensus fourth quarter. Other investors may have been disappointed that the third and fourth quarters won't provide significant positive surprises as the first and second quarter did.

My view is that management has earned some trust and credibility and wants to maintain it by providing realistic expectations and consistently hitting numbers. That would be a big change for MOT and one that will reward investors with a higher valuation on the shares.

Posted by Steve Birenberg at October 20, 2004 09:22 PM