This just in -- Motorola (NYSE:MOT) has announced that it will report Q3 2006 earnings tomorrow afternoon. This doesn't give us a whole lot of time to get up to speed before the big day, but with time a-wasting, there's nothing to it but to get started right away.

What analysts say:

  • Buy, sell, or waffle? Thirty-four analysts follow Motorola. All but five of them rate the stock a buy. The remainder say "hold."
  • Revenues. On average, the analysts think Motorola grew its sales 17% last quarter to nearly $11.1 billion .
  • Earnings. . but eked out just a 6% gain in profits, to $0.34 per share.

What management says:
The big news out of Motorola this quarter was undeniably its announcement late last month that it has bid $15 per share to acquire Symbol Technologies (NYSE:SBL). Read all about it in Jack Uldrich's write-up. The other big news was the plan to set up a series of "InstantMoto" "robotic stores" to dispense its products in malls and airports (and yes, Jack covers that story in his column as well).

Actually, it was a pretty busy quarter all around -- because there's a third bit of big news that, in this Fool's opinion, actually dwarfs the other two. Barely one week after reporting Q2 earnings results that boasted 29% sales growth and a 49% leap in profits -- news that should have put to rest any conceivable investor unrest at the company -- management announced that its board had voted to terminate the firm's shareholder rights plan. Such plans, colloquially known as "poison pills," aim to protect management's jobs (under the guise of protecting the referred-to shareholder rights) by scaring off would-be acquirers bearing premium purchase prices. Without getting into too much boring detail, therefore, here's the rule of thumb: When a company sets up a "shareholder rights" plan, that's bad. When it shuts one down, as Motorola has done, that's good. Way to go, Moto.

What management does:
As shown in the table below, the business has continued to suffer margin compression near the top line. In the first half of this year, sales rocketed up by an impressive 27%, but cost of goods sold outpaced even that fast clip, rising 30%. Fortunately for shareholders, though, Motorola has held the line on operating costs, restricting their rise to just a 21% gain within the period. Result: Operating margins have fallen much less steeply over the last year, and actually sit higher today than they were 17 months ago.

Margins %

4/05

7/05

10/05

12/05

4/06

7/06

Gross

33.4

33.0

32.6

32.1

31.6

31.1

Op.

10.8

11.1

11.7

11.6

11.4

11.3

Net

5.1

8.5

11.7

12.4

11.8

12.2
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
If all that good news weren't enough, the company's balance sheet pretty much seals the deal, and explains why members of management aren't feeling any particular fear for their jobs these days. So far this year, the firm's working capital management has been nothing short of superb. Against the aforementioned 27% sales growth, it has held accounts receivable growth to a 24% gain. Moreover, inventories are up just 15% -- barely more than half the rate of sales growth.

Motorola's products are so hot that they spend little time on store shelves before being converted into cash. With things going this well, it's little wonder management is waxing confident.

Competitors:

  • Alcatel (NYSE:ALA)
  • Cisco (NASDAQ:CSCO)
  • Hewlett-Packard (NYSE:HPQ)
  • Nokia (NYSE:NOK)
  • Qualcomm (NASDAQ:QCOM)

For additional Moto-updates, read:

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Fool contributorRich Smithdoes not own shares of any company named above. The Fool has a disclosure policy.