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KRZR Burn

The remarkable and sustained appeal of the RAZR cellphone has created great expectations for every subsequent device launched by Motorola Inc. (NYSE: MOT). Unfortunately for Motorola, these expectations have generally been dashed pretty quickly, and the firm's latest high-end hopeful, the KRZR handset, appears to be following that trend.

The $200 KRZR (pronounced "Crazer") was supposed to help shore up declining U.S. RAZR sales and margins in the most recent quarter. That didn't happen, according to Citigroup analyst Daryl Armstrong, who says that the KRZR launch has been a let-down. (See Handsets on Parade.)

"It is fairly clear that Motorola’s high-profile launch of the KRZR has been disappointing," writes the analyst in a research note. "So far, Motorola has failed repeatedly to replicate a hit in its new product portfolio."

This means that Motorola has a "hole in their mid-to-upper end product line" that was evident in the company's third quarter results and "is unlikely to be fixed" in the near term, Armstrong Suggests. (See Motorola's Mixed Bag.)

Part of the problem is that Motorola's rivals have caught up with the vendor and are now replicating its slim, sexy phone strategy. Hence phones such as LG Electronics Inc. (London: LGLD; Korea: 6657.KS) 's "Chocolate" handset. (See Cutting Edge Chocolate.)

It's not all bad news for Motorola investors. For the fourth quarter, Armstrong predicts shipments of around 61.5 million units, bolstered by other handset products.

Citigroup is downgrading its earnings-per-share estimate for the quarter by $2 to $27 a share but maintains its "Buy" rating on the stock.

Motorola has not yet announced a date for its fourth quarter results, which are expected the week of Jan. 15.

— Dan Jones, Site Editor, Unstrung

tonyoc 12/5/2012 | 3:17:02 PM
re: KRZR Burn Just a quick note on your otherwise interesting KRZR Burn article, the Chocolate is an LG device and not a Samsung device...
joset01 12/5/2012 | 3:17:01 PM
re: KRZR Burn Yes, my mistake, I got the two companies mixed up. So many new gadgets these days. Thanks for the heads-up, I have changed the article.

-- DJ
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