In spite of continuous business restructuring for the past year, the segment is being seriously challenged by devastating decline in sales volume since the beginning of fiscal 2008. During the first quarter of 2009, the company sold just 14.7 million units, down approximately 46% year-over-year and down 23.4% from previous quarter.

According to industry findings, Motorola now commands approximately 6% global market share for handsets, significantly behind Nokia (38%) (NOK), Samsung (18.8%), and LG (9.2%). None of its new launches products have favorable market traction as its iconic RAZR mobile phones had a few years ago.

Consumer preferences have shifted towards high-end feature-rich wireless PDA devices and smart-phones, which are gaining significant market acceptance. Unfortunately, Motorola’s PDA line lacks enthusiastic consumer appeal compared to Apple’s (AAPL) iPhone, Research in Motion’s (RIMM) Blackberry, Nokia’s N-series, or Palm’s Pre (PALM). This high-end segment is also crowding with other solution providers, including Google (GOOG), Samsung, and HTC vying for market share.

Enormous cash drain from the mobile handset division has pushed Motorola’s overall debt servicing outlook to negative. On February 3, Moody’s Investor Services downgraded Motorola’s broad credit rating to Baa3 from Baa2 and short-term rating to Prime-3 from Prime-2. Business restructuring is likely to result in higher cash drain due to severance payments and other charges. Motorola’s board of directors has also suspended dividend payments due to a weak cash position.

Motorola said it will launch a new 3G high-end smart-phone based on Google’s Android software during the fourth quarter. We are not convinced that a turnaround will take place without major structural revamps as the company is exposed to lingering economic headwinds, lower overall worldwide demand for mobile handsets and a lack of high-end competitive PDA wireless devices in its handset range. Thus, we maintain our Sell recommendation on Motorola.

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day:

We are keeping our Buy recommendation on Companhia Energetica de Minas Gerais, or CEMIG (CIG). Although the company posted lower-than-expected results for the first quarter of 2009, those results were impacted by a few non-recurring items.

However, the short-to-medium term outlook remains promising as demand for electricity in Brazil keeps growing. Despite the global credit crunch, we still have a reasonably positive outlook for the Brazilian economy in the short term.

Finally, CEMIG has a solid dividend payout, and we believe that the stock is quite undervalued compared to other international electric utilities.

Bear of the Day:

While we maintain our Sell rating for Motorola (MOT), we have adjusted our valuation target higher based on current market conditions. MOT is a leading manufacturer of mobile handsets, network infrastructure, and cable products.

Revenue in the last reported quarter was significantly below our estimates due to continued weakness of the mobile handset sales. We are not convinced that a turnaround will take place without a major restructuring initiative as the company is exposed to lingering economic headwinds, lower overall worldwide demand for its handsets, a lack of high-end competitive PDA wireless devices, and reduced visibility for near-term revenue improvement.

However, stringent cost control measures taken by the management and development of new smart-phone devices are some initial positive indicators that will be monitored for longer-term rating consideration.

Latest Posts on the Zacks Analyst Blog:

A Modest Proposal

Today, the NYSE will probably trade about 5 billion shares. The average price of a S&P 500 stock is about $33. Thus, on the NYSE alone, $165 billion is changing hands in a single day. If there were a transaction fee of 0.1% on that, it would raise $165 million a day, or with about 250 trading days a year, about $41.25 billion per year. If similar fees were levied at the Nasdaq and on options, the total could reach the vicinity of $100 billion. That is not enough to close the fiscal gap, but not exactly chopped liver either.

Long-term investors would hardly notice the tax, but speculating day traders would quickly start to feel the bite. Encouraging people to take a long-term view and actually invest -- rather than engage in pure speculation in little pieces of paper that just happen to represent real companies -- would be a good thing, in my view.

The tax would fall on the Financial sector, and would be a way that that sector ends up repaying the lavish subsidies that it has recently received. Since wealth is even more unequally distributed in this country than is income -- and the wealthy hold much more of their wealth in equities than do the middle class -- the tax would be highly progressive. In effect, the tax would be like a slightly higher commission charge.

This, at the margin, might hurt firms that do a lot of trading particularly for their own account, like Goldman Sachs (GS). For firms that trade mostly for their clients like E-Trade (ETFC) and Charles Schwab (SCHW), I suspect that the fee would be passed along to the customer, especially since it could not be avoided by moving your account to another broker.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2677.

About Zacks 

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks InvestmentResearch is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Revenue in the last reported quarter was significantly below our estimates due to continued weakness of the mobile handset sales. We are not convinced that a turnaround will take place without a major restructuring initiative as the company is exposed to lingering economic headwinds, lower overall worldwide demand for its handsets, a lack of high-end competitive PDA wireless devices, and reduced visibility for near-term revenue improvement.

However, stringent cost control measures taken by the management and development of new smart-phone devices are some initial positive indicators that will be monitored for longer-term rating consideration.Zacks Investment Research

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Monday's Analyst Blog:

PALM: Hype & A Hot Stock

One of this year's hottest stocks has been Palm (PALM). Yes, the Palm that made PDA famous.

Last fall, shares of the company could have purchased for about $1.50 per share. On Friday, the stock closed at over $10. Year-to-date, PALM's return puts it within the top 1% of all stocks within the entire Zacks Rank universe.

A very impressive run. Unfortunately, the strong upward move is based on hype.

Hartford Loss Worse than Expected

Hartford Financial Services Group, Inc. (HIG) reported its results after market close yesterday, with a conference call held this morning. 1Q09 net loss came in at $1.2 billion, or $3.77 per diluted share, compared with 1Q08 net income of $145 million, or $0.46 per diluted share. Excluding investment results, operating loss was $3.66 per share, far worse than the consensus estimate of a loss of $3.05 per share.

Written premiums for P&C operations were approximately $2.5 billion, down 5% from the year-ago quarter. Net income from ongoing operations was $111 million, including the effect of a $188 million net realized capital loss, compared with net income of $312 million, including the effect of an $87 million net realized capital loss, for 1Q08. The decrease in net income was primarily due to higher net realized capital losses and lower net investment income.

Callidus Software Losses Mount

Shares of Callidus Software, Inc. (CALD, Hold) are off over 6% in trading today following the company's Q1 earnings release yesterday. Q1 revenues of $25.9 million was higher than our estimate of $25.2 million and consensus of $24.9 million, while non-GAAP EPS came in lower than expected. Q1 loss of $(0.05) per share was significantly lower than our and consensus estimate of a loss of $(0.02) per share.

Callidus is one of the major providers of Enterprise Incentive Management (EIM) software systems. EIM software helps large enterprises across many industries determine and automate total compensation packages. Q1 revenue upside came mainly from the Services & Other segment, while recurring revenues came in line with expectation.

Consolidated Edison In-Line

Consolidated Edison (ED) reported 1st quarter 2009 earnings of $180 million, or $0.66 per share, down 41% compared to $303 million, or $1.11 a share, in the 1st quarter of 2008. Excluding extraordinary non-recurring items, earnings from ongoing operations were $214 million, or $0.78 per share, down 10% from $237 million, or $0.87 per share, in the comparable period of 2008.

ConEd's reported operating earnings results for the 1st quarter beat our estimate of $0.77 per share by a penny per share.

Washington Post Misses Ests

Washington Post Company (WPO) posted 1Q09 results that proves even the higher education business isn't impervious to a recession.

The publisher of its namesake newspaper and Newsweek magazine reported that 1Q09 EPS from continuing operations excluding one-time charges plunged to $0.41, grossly missing our estimate of $3.37 and the consensus of $3.48. EPS in 1Q08 was $5.68. Including the myriad charges, the company lost $2.04 in 1Q09, after earning $4.08 for 1Q08.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Tuesday's Analyst Blog:

Verizon iPhone Talks Resurface

Both Verizon Wireless (VZ) (Verizon owns 45% and Vodafone [VOD] owns 55%) and AT&T (T) have announced their quarterly results, and the rumor of a joint iPhone and Verizon Wireless deal has resurfaced.

Wireless revenue at AT&T grew 39% to $3.2 billion, and net wireless subscribers grew by 1.2 million. This growth was due to the sale of 1.6 million iPhone activations and the increase in data service revenue needed by most users of the iPhone (if you want to surf the web you need a data service contract).

Verizon Wireless added 1.3 million net subscribers plus those added from the Alltel acquisition. Verizon had 19.3 million smartphone subscribers at the end of the quarter, and smartphone and PDA sales accounted for 41% of direct device sales.

Deutsche Bank's Strong Bounce

Today, Deutsche Bank AG (DB) reported a strong bounce in earnings, posting net income before nonrecurring items of EUR1.4 billion compared to a EUR985 million loss in the prior-year quarter. This was well ahead of our EUR198 million estimate for the quarter.

This result was primarily driven by a EUR9.8 billion positive swing in trading income to a gain of EUR1.9 billion from a loss of EUR7.9 billion in the year-ago quarter, partly offset by a 95% drop in net gains on financial assets/liabilities to EUR338 million from EUR6.3 billion last year. Net interest income advanced 44% to EUR3.8 billion.

PartnerRe Routs Estimates

On April 27, 2009, after market close, PartnerRe, Ltd. (PRE) reported its 1Q09 financial results. A conference call to discuss the results was held this morning.

Operating income (excluding net after-tax realized and unrealized investment gains/losses, net after-tax realized gain on the purchase of the Capital Efficient Notes [CENts], and net after-tax interest in results of equity investments) for 1Q09 was $155.7 million or $2.72 per diluted share, compared to $110.2 million or $1.98 per diluted share recorded in the prior-year quarter. 1Q09 operating income was substantially ahead of estimates. Better-than-expected results were mainly attributed to lower expenses and positive return on invested assets.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Both Verizon Wireless (VZ) (Verizon owns 45% and Vodafone [VOD] owns 55%) and AT&T (T) have announced their quarterly results, and the rumor of a joint iPhone and Verizon Wireless deal has resurfaced.

Wireless revenue at AT&T grew 39% to $3.2 billion, and net wireless subscribers grew by 1.2 million. This growth was due to the sale of 1.6 million iPhone activations and the increase in data service revenue needed by most users of the iPhone (if you want to surf the web you need a data service contract).

Verizon Wireless added 1.3 million net subscribers plus those added from the Alltel acquisition. Verizon had 19.3 million smartphone subscribers at the end of the quarter, and smartphone and PDA sales accounted for 41% of direct device sales.

With the strength of Verizon Wireless on a worldwide basis, the rumors of Verizon/Apple (AAPL) talks have resurfaced. It has been said that Verizon was one of the original group of companies that Apple talked to about the launch of the iPhone but that the talks stalled due to the terms that Apple asked for (revenue sharing and sale price of the device). There are a number of factors that impact a Verizon deal.

One factor was that there are two major technologies for cellular transmission -- Code Division Multiple Access (CDMA) and Global Service Mobile (GSM). The iPhone is a GSM device. According to sellers of worldwide phone services, there are 170 countries that use GSM technology, and you can buy a Subscriber Identity Module (SIM) card with a cell number and cell time in all of them for use in an unlocked phone.

You can use an iPhone anywhere a GSM network is available, but you can't buy an iPhone from anyone but AT&T. CDMA technology is used in the US (except for AT&T and T-Mobile [DT]) and in Korea (which has no GSM service). Verizon uses CDMA technology and has the largest data infrastructure in the USA.

China, the largest subscriber base in the world, uses both CDMA and GSM.

Another factor is that AT&T does not sell the iPhone on a worldwide basis, and the phone is tied to an AT&T contract (except in the black market). This limits iPhone sales overall until AT&T's exclusive contract ends next year.

Other points:

• Most of the world sells service and phones on a separate basis. You pay market price for a phone and buy time from a service provider.   
• The iPhone is not cheap, selling for $499 or more. Apple has a history of being reluctant in entering a commodity market and selling based on price. Apple would have to have made two versions or a dual version (I do not know of a cell phone that has both CDMA and GSM capability), one for CDMA (which would compete with AT&T) and the GSM version.   
• The AT&T deal ends in 2010, so no other contract will occur before that. Apple will release its new iPhone this June with its new operating system.   
• New smartphones with better features, such as the Pre from Palm (PALM), will be in the market over the next year, and I am sure that Apple will enhance its operating system again in 2010.

But nothing happens until 2010.

Motorola's handset division continues to lose market share as it contends with soaring operating losses. Cell phone sales in the last reported quarter registered a drop of 53% year-over-year. Additionally, the company suspended future dividend payment to shareholders.

We are not convinced that valuation levels will improve over the next three to six months without a major restructuring initiative as the company faces economic headwinds, lower overall worldwide demand for its handsets, a lack of high-end competitive PDA wireless devices, and reduced visibility for near-term revenue improvement.
"MOT" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research