Motorola (MOT) and Sprint (S) are already in trouble. But, recent news would indicate that things are getting worse at both companies That should show up in their Q2 numbers (or warnings).
Motorola is in danger of losing its No.2 spot among global handset companies to Samsung. CIBC projects that MOT will only ship 40 million handsets in Q2, which is less than any quarter in over a year. According to the bank’s reports, sales in Europe and Southeast Asia are particularly weak.
US sales of Motorola’s new RAZR 2 will rely on Qualcomm (QCOM) newer chipsets, and the ITC is keeping those out of the US. MOT’s forecast could be hit by that.
And, the federal government is opening up competition in the cable set-top business which has been owned by Motorola and Cisco (CSCO) unit Scientific Atlanta.
Sprint (S) has not only been under-performing competitors AT&T (T) Wireless and Verizon Wireless in terms of adding new subscribers, Bear Stearns recently wrote that the company’s churn rate and cost savings are falling behind expectations.
If the Apple (AAPL) iPhone is the success that almost everyone thinks it will be, Sprint gets hurt, at least short term, and handset nuts buy the phone from AT&T Wireless. The company is trying to bulk up its subscriber ranks by buying Northern PCS.
Since the beginning of the year, Sprint is up 15%. That’s getting ahead of its supply lines as they say in the Army.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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