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Motorola Banking On Flashy Razr2 Phone As Sales Boost

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By ASHLEY M. HEHER, The Associated Press

Published: October 25, 2007

CHICAGO - With a sleek design and an even sleeker advertising campaign, Motorola is banking on its new Razr2 cell phone to pump up anemic sales and provide a rosier future after a yearlong slump punctuated by back-to-back losses.

After a first half that may have put Chief Executive Officer Ed Zander's employment into question, the end of Motorola's rough patch may be in sight.

'We indeed believe the worst is over,' Citigroup analyst Jim Suva wrote in a research note last week.

But analysts say the cell phone maker needs a steady string of follow-ups to stay alive in an industry dominated by products crammed with cutting edge features and software.

Rival Samsung Electronics Co. overtook Motorola this summer to secure the No. 2 spot among cell phone manufacturers worldwide. Finland's Nokia Corp. remains the far-and-away leader. Some analysts say Motorola's market share has continued to erode and dropped back to 11 percent in the third quarter, from 22 percent last year.

Motorola hasn't had much luck on Wall Street either, where its stock has plunged 20 percent since last fall.

'If they have another miss this quarter, the pressure is going to be huge on the board to do something,' said Eric Jackson, a Naples shareholder who launched the grass-roots initiative called 'Plan B' that calls for Zander's resignation, among other changes. 'You only get to say 'mea culpa' so many times.'
Wall Street analysts expect earnings to hit 4 cents per share on revenue of $8.8 billion when the Schaumburg, Ill.-based company reports third-quarter earnings today.

Any third-quarter profit would be driven by Motorola's hand-held business devices and high-tech home entertainment gadgets. The company has said its cell phone unit will remain unprofitable until at least 2008.

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