Motorola's Razr 2 forecast to flop as iPhone sales surge
January 23, 2008
By Ville Heiskanen
New York - Motorola may post disappointing sales of the Razr 2 cellphone after holiday shoppers flocked to Apple's iPhone.
Motorola probably sold 2 million Razr 2s, the slimmer camera phones the company is relying on to revive revenue, in the fourth quarter, said former Oppenheimer analyst Lawrence Harris. Apple may have sold 2.4 million iPhones.
Harris estimated Motorola sold half as many Razr 2s over a similar period compared with the original model, whose 2004 debut started a craze for ever-thinner cellphones. Motorola fell to third place among global handset makers last year and may drop to fourth this year.
US-based Motorola might say today that net income fell 59 percent to $255 million (R1.8 billion) in the fourth quarter, according to nine analysts surveyed by Bloomberg. Sales probably slid 18 percent to $9.65 billion, the survey showed.
A Motorola spokesperson declined to comment.
Motorola's shares dropped 22 percent last year, while Apple's more than doubled.
Michael Walkley, an analyst at Piper Jaffray, said the fading popularity of the original Razr probably cost Motorola its position as the top-selling handset at AT&T, the biggest US phone operator, for the first time since 2004.
It probably ceded that spot to Samsung's Sync video and camera phone last quarter.
He said Motorola had to improve marketing to show consumers the new phone was a step up, adding that the $300 Razr 2 was too similar to the first, which was available for free with a contract.
Walkley said Razr 2 holiday sales were "disappointing."
Harris said Motorola had probably sold about 3 million Razr 2s since its second-quarter debut. The Razr sold almost 12 million in its first year.
The Razr 2 is thinner, has a better camera and can store more songs than the original. Walkley said consumers had not bought them as quickly as Motorola shipped them.
Brad Williams, an analyst at MTB Investment Advisors, said: "The Razr 2 doesn't stand out the way the original did. There are less-expensive products that look strikingly similar to the Razr 2." His firm sold its Motorola shares last year.
The $399 iPhone, which blends Apple's best-selling iPod music player with an e-mail-equipped handset, is stealing sales from Motorola. The iPhone broke AT&T's opening-weekend records and sold more in three days after its June 29 debut than the original Razr did in its first month.
Last week, Apple chief executive Steve Jobs said the firm had sold more than 4 million of the phones.
Analysts said Apple probably sold 2.4 million iPhones last quarter.
Nokia, Samsung and Sony Ericsson have also introduced phones superior to the Razr 2 in features, according to an analysis by Cowen & Company. That might help Sony Ericsson overtake Motorola as the third-biggest handset maker this year, Cowen analysts said.
Sony Ericsson had increased its market share to 8.8 percent in the third quarter, behind Motorola's 13.1 percent, said researcher Gartner. Samsung had 14.5 percent, and Nokia dominated with 38.1 percent.
Motorola probably sold 41 million phones last quarter, Citigroup's Jim Suva said in a report this month.
A year earlier, it sold 65.7 million phones.
Greg Brown, who took over as Motorola chief executive on November 30, is working on video and music phones to win customers back.
Motorola plans to start selling the Moto Z10, for shooting and editing video, and the Rokr E8, which holds about 5 000 songs and includes a camera, this quarter.
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