Weekly News via Email
   Set as homepage | Add to favorites | Customer Service | Subscribe Now | Place an Ad | Contact Us | Sitemap Sunday, 01.21.2018
News Archive
Su Mo Tu We Th Fr Sa
 1  2
 3  4  5  6  7  8  9
 10  11  12  13  14  15  16
 17  18  19  20  21  22  23
 24  25  26  27  28  29  30
Online Extras
Site Services
Around Bend
Outdoor Fun
Travel Info
Shop Local

Members Of

Poll: Today's Live Poll
Email to a friend | Print this | PDF version | Comments (0 posted) 
  Blogger |   del.icio.us |   digg |   newsvine

Jun 29,2007
Taking Stock: Motorola: The big engine that can't
by Malcolm Berko

Dear Mr. Berko: I have owned several Motorola phones and I'm pleased with how they work. I would like to invest $1,000 for my son, who also owns a Motorola cell phone, and buy him 50 shares of Motorola stock, which sells for less than $20. Do you think this would be a good, long-term purchase for him?


Aurora, Ill.

Dear P.N.: It's almost inconceivable that back in early 2000, Motorola Inc. (MOT-$18.71) was trading at $180 a share then split 3-for-1. MOT's revenues in 2000 were $37 billion and this year MOT believes it will post $42 billion in revenues. That's wondrously unimpressive.

In 2000, MOT's free cash flow was $1.94, it earned 90 cents a share, book value was $8.94 and net profit margins were 5.9 percent. This year, MOT's free cash flow might be 85 cents, earnings could reach 50 cents, book value will probably fall to $6.50 while net profit margins may collapse to 2.6 percent. That's roundly underwhelming!

Most folks know that MOT designs, manufactures, sells and services cell phones, accessory products and licenses intellectual products to carriers. Most of us also know that MOT is a powerful player in the network and enterprise markets.

In the past few years, MOT has become a textbook example of incompetent management. Chief Executive Officer Ed Zander was paid $5 million plus perks to visit his office a few days each week and have rugelach and coffee with his toadies. MOT is also a textbook example of a quintessential rubber-stamp board of directors, each of whom ought to be publicly pilloried for allowing incompetent and sophomoric management to run the company. One prime directive of a corporate board is to patrol the company in the best interest of shareholders. MOT's hugely paid but inutile puppets and pawns miserably failed shareholders.

Meanwhile, Zander would play golf at a private, prissy Chicago country clubs rather than run a $40 billion company. MOT's board prefers to party rather than perform their elected duties. Zander publicly admitted that laziness and mistakes have crippled the stock and faults his board for refusing to adopt 3G technology while the competition was gobbling market share in the U.S. and abroad. Why MOT's stockholders blithely accept this malfeasance is an enigma to me.

With falling revenues and earnings, Zander and his pigeons on the board approved a massive stock repurchase program and will lay off 5 percent of the work force to reduce costs. That's really bloody stupid because neither will improve revenues or net profit margins.

Zander and his sycophantic board need to hire creative research and development people to create exciting, new products. Zander and his apple-polishers must hire inspired marketing people with vision to improve revenues. Finally, Zander and his pawns must find professionals who can bring efficiency to MOT's development, production and distribution process. Failing that, MOT might as well fold its tent and steal away.

Because I doubt that Zander and his board have the capability to accomplish those goals, I would not want to own the stock. And this seems to be the prevailing opinion on Wall Street. So far in 2007, Bear Stearns, Oppenheimer, CIBC World Markets, Deutsche Securities, Jeffries, Lehman Bros., Charter Equities, Value Line, BMO Capital Markets, Goldman Sachs and RBC Capital Markets have all downgraded Motorola. In fact, there's not one "buy" recommendation among the 11 analysts.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at malber@comcast.net.

© Copley News Service

1640 times read

Related news

Taking Stock: Enthusiasm for Packaging Corp. easy to contain by Malcolm_Berko posted on Oct 05,2007

Taking Stock: Sara Lee gets its just desserts by Malcolm Berko posted on Mar 30,2007

Taking Stock: Denny's might be a tasty investment by Malcolm Berko posted on Mar 30,2007

Did you enjoy this article? Rating: 5.00Rating: 5.00Rating: 5.00Rating: 5.00Rating: 5.00 (total 11 votes)

Market Information
Breaking News
Most Popular
Most Commented
Featured Columnist
Horoscope Guide
Aquarius Aquarius Libra Libra
Aries Aries Pisces Pisces
Cancer Cancer Sagittarius Sagittarius
Capricorn Capricorn Scorpio Scorpio
Gemini Gemini Taurus Taurus
Leo Leo Virgo Virgo
Local Attractions
Bend Visitors & Convention Bureau
Bend Visitors & Convention Bureau

Mt. Bachelor Resort
Mt. Bachelor Resort

Les Schwab Ampitheater
Les Schwab Ampitheater

Deschutes County Fairgrounds
Deschutes County

Tower Theatre
Tower Theatre

The High Desert Museum


Deschutes County

  Web    BendWeekly.com
© 2006 Bend Weekly News
A .Com Endeavors, Inc. Company.
All Rights Reserved. Terms under
which this service is provided to you.
Please read our Privacy Policy. Contact us.
Bend Weekly News & Event Guide Online
   Save the Net
External sites open in new window,
not endorsed by BendWeekly.com
Subscribe in NewsGator Online
Add to Google Add to MSN Add to My AOL
What are RSS headlines?