As I mentioned in my Valentine's Day profile of Motorola (NYSE:MOT) as one stock that this Fool loves, the diversified consumer electronics manufacturer has had a hard time getting respect on Wall Street in recent months. Despite turning in three straight quarters of terrific results, the stock's price remains stuck right about where it was at the beginning of 2004.
One reason for the Street's ongoing diss is certainly the company's cloudy outlook going forward. The fact that its Razr cell phone has skyrocketed in popularity hasn't been enough to outweigh concern over lost sales if Nextel (NASDAQ:NXTL), once assimilated into Sprint (NYSE:FON), stops buying infrastructure equipment -- and/or phones -- from Motorola. It seems that for every good thing that gets said about Motorola, a "but" must be appended.
Yesterday, however, the company reported a deal that may start tipping the balance back toward the green side of Motorola's stock chart. In a joint press release, Motorola and cable giant Comcast (NASDAQ:CMCSA) announced that Motorola has won a contract to provide Comcast with $1 billion worth of cable set-top boxes, including basic vanilla cable boxes and super fancy-shmancy high definition digital video recorders (DVR).
For Comcast, the deal is its biggest set-top buy ever -- even stretched out over the course of several years, as it is. For Motorola, it's a vote of confidence from one of its biggest customers -- one that, in fact, accounts for 30% of all sales made by Motorola's broadband communications division. And warm fuzzies aside, the money will also be nice.
While the announcement did not state this specifically, the deal probably also requires marking an X in the loss column for Motorola's DVR-manufacturing rival, Scientific-Atlanta (NYSE:SFA), which counts Comcast as its No. 3 customer. While Comcast has bought machines from both Scientific-Atlanta and Motorola in the past and, I imagine will continue to do so, it seems only logical that $1 billion in equipment sales awarded to Motorola is $1 billion in equipment sales that will not be going to Scientific-Atlanta over the next few years.
For more cable TV news, dial up:
- Stocks Fools Love: Motorola
- Scientific Facts
- Record Some Digital Profits
- Cablevision Changes Channels
- Comcast Hooks 'Em Up
Fool contributor Rich Smith owns shares of Motorola but has no position, short or long, in any other company mentioned above.
