Motorola’s latest quarterly results give some indication into what the RAZR’s doing for them… and it’s not all good news, says one Wall Street analyst. After I said that Moto was beating a dead horse, Russell Beattie wondered why they should mess with something that works. It’s a fair point — but the results go to show that sometimes there’s more to “healthy” sales than raw unit numbers.
Merrill Lynch analysts took a look at two key metrics for any handset vendor — profit margins and average selling prices. ASPs are under pressure across the board, but particularly at a company like Motorola that’s making a big push into emerging markets, where obviously handsets need to carry lower prices. These prices also affect margins, the measure of how profitable the company’s products are. Motorola’s ASPs in the quarter declined from $146 to $139, while margins edged up only slightly, leading the firm to conclude:
Despite substantial growth in shipments of thin phones, ASPs declined from $146 to $139 and operating margins only grew marginally. Merrill Lynch noted this leading them to make three conclusions: 1) RAZR is cannibalizing mid-range phones and/or 2) RAZR is heavily discounted, and 3) Investment in emerging market channels hurts margins.
They go on to say they’re concerned about further margin deterioration once the RAZR goes out of style — a feeling that’s probably exacerbated by the absence of any ready replacement for it.
[tags]mobile, motorola, razr, mobile phones[/tags]
—–>Follow us on Twitter too: @russellbuckley and @caaarlo
Recent Comments