Credit Suisse upgrades Motorola to 'Neutral'

Mon, 02/23/2009 - 7:20am
The Associated Press

NEW YORK (AP) — Motorola got a rare vote of confidence today as Credit Suisse analysts upgraded the stock from "Underperform" to "Neutral," saying they believe losses in the company's long-ailing cell phone division have bottomed out.

Motorola shares rose 12 cents, or 3.3 percent, to $3.73 in premarket trading. In late November, the telecom equipment maker's shares hit a multiyear low of $3.

Credit Suisse analysts headed by Kulbinder Garcha said that meetings with Motorola management last week gave them increased confidence in the mobile phone maker's focus on cutting costs.

Motorola has said it is committed to turning around the cell phone business, but the analysts noted that if the company decides to shut it down, that would only cost about $2.7 billion. Meanwhile, the division reduces the company's market capitalization by about $4 billion at Motorola's current stock price.

For the fourth quarter, Schaumburg, Ill.-based Motorola posted a loss of $3.6 billion, or $1.57 per share, largely due to a write-down of the value of the cell phone division.

Motorola's other two divisions, which make devices such as cable set-top boxes and police radios, are doing relatively well, and make up two-thirds of sales.

The analysts still expect Motorola's share of the global cell phone market to decline, to about 4 percent in the third quarter from 6.5 percent in last year's fourth quarter.

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