Razr, India sales make Motorola attractive
The pick: Birkelbach
owns 20,000 shares of
Motorola
Inc., much of it acquired two years ago after the stock began rising from
its 2003 low of $6.90. Birkelbach paid an average of $16 for the shares. The
stock rose to almost $25 in November but he's not ready to sell.
The reasons: Schaumburg-based Motorola's revenue rose 18% in 2005 as
its Razr cell phone became a worldwide best seller. Analysts expect the growth
rate to slow to 12% to 14% this year and next. "That's still very strong growth
for a company this size," Mr. Birkelbach says. Some Wall Street analysts predict
Motorola's stock could rise to the $27 to $30 range, a view with which Mr.
Birkelbach agrees. It may take as long as two years for Motorola to reach that
level, he says. Future growth will be fueled by Motorola's increasing focus on
emerging markets such as India.
The risks: The biggest challenge for Motorola will be to follow up
Razr's success with other hot products. There are also questions about parts
shortages. "Motorola in recent years has shown that it can introduce new
products, but shipping them in big volumes to customers on time has been
something else again," Mr. Birkelbach says.
©2006 by Crain Communications Inc.
