You know the old saying, "There's just no pleasing some people"? Seems a lot of those people work on Wall Street. Yesterday, Motorola
Motorola even went so far as to predict precisely the same fourth-quarter revenues and profits that the Street had (officially) been looking for: mid-$9-billion revenue and about $0.24 in per-share profits, which would equate to roughly 20% year-on-year earnings growth. Official expectations aside, analysts were reportedly disappointed when, upon opening the earnings statement, they found no "special prize" inside -- something along the lines of the cell phone shipment numbers that rivals LG, Samsung, and Sony
The Street's reaction seems especially peculiar in light of the fact that Q3's superb results were no fluke but just the continuation of a strong resurgence at Motorola. Over the past nine months, sales are up 36% over last year, and net margins are better by half after increasing from 2.1% to 3.4%. Result: Profits are up by well more than 100% per diluted share ($0.37 year-to-date). The company looks well on its way to notching GAAP profits in the low $0.60s for the year.
Now granted, with a share price in the upper $17s, that gives Motorola a pretty lofty P/E ratio of about 30. Companies that richly valued aren't often given a whole lot of slack when they underperform. But come on! That P/E completely understates Motorola's true cash profitability. Even without considering this quarter's strong performance, which hasn't yet been entered into Yahoo!
There's plenty more to know about a big business such as Motorola. Read all about it in:
Fool contributor Rich Smith owns shares in Motorola rival Nokia but not in any other company mentioned in this article.