Moto Losing Some Mojo

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Like most other stocks on Friday, Motorola's (NYSE: MOT) shares fell, dropping 7.68% to $22.48. Despite healthy net income, the company spooked investors by indicating that its sales weren't as rosy as Wall Street had expected.

In fairness, though, the company certainly posted a strong fourth quarter. Revenues increased 18% to $10.43 billion, though the consensus forecast was for $10.5 billion. Year over year, net income went from $647 million, or $0.26 per share, to $1.2 billion, or $0.47 per share. The Street was expecting $0.34 per share.

True, the top-line results were a bit of a disappointment to Wall Street folk. But it bears noting that Motorola has made significant progress over the past few years. Just as the iPod rejuvenated Apple (Nasdaq: AAPL), Motorola has had its own killer product: the RAZR phone.

Basically, much of the growth from the fourth quarter came from a surge in demand for RAZR phones (doubling to 13 million, compared to the third quarter). Motorola has become fashionable -- which is increasingly important as cell phones become commoditized. Other companies such as Nokia (NYSE: NOK) cannot seem to generate the kind of cachet that Motorola has.

Motorola has new phones hitting the market with cool names like PEBL and SLVR, but even CEO Ed Zander admits it will likely continue to rely on RAZR for its growth. Motorola also has other business segments, such as networking equipment and set-top boxes, but these are mostly mature markets.

Motorola projects sales of $9.3 billion to $9.5 billion in the first quarter of 2006, with earnings per share of $0.27 to $0.29. The Street expects revenues of $9.35 billion and $0.28 in earnings per share.

It looks like Motorola's growth will continue -- but with the company much more finely tuned, it will get harder and harder to surprise investors.

Fool contributor Tom Taulli does not own any shares in the stocks mentioned in this article.