Motorola Mobility Holdings Inc. (MMI) finally entered into next-generation 4G wireless field. Yesterday, the company announced that Verizon Wireless, the largest wireless operator in the U.S., will start selling its much hyped 4G Long-Term Evolution (LTE) capable Droid Bionic smartphone from September 8, 2011. Verizon Wireless is a joint venture between Verizon Communications Inc. (VZ) and Vodafone Group plc. (VOD). Droid Bionic runs on Google Inc. (GOOG) developed Android operating system.
Droid Bionic was expected to be launched in the second quarter of 2011. However, Motorola Mobility delayed its launch by a quarter after management received quite a few negative feedback for this phone for which it wants to make some changes and improve it further. In the meantime, Samsung Electronics and HTC Corp. came out with their respective 4G LTE capable Android-based smartphones. As a result, Motorola mobility lost some vital market share to those two companies. In last July, management predicted that its third-quarter financial results will be affected due to this delay.
Droid Bionic will be the first Verizon Wireless smartphone, which combines 4G LTE with dual-core 1 GHz processors. At present, this device stands as the thinnest 4G LTE smartphone in Verizon desk. Droid Bionic will cost $299.99 with a new two-year data plan of Verizon Wireless. Several industry analysts expressed their confidence that Droid Bionic may turn out to be game changer for Motorola Mobility. The company earlier declared that it expects its core Mobile Devices segment to achieve profitability in the fourth quarter of 2011, primarily leveraging on Droid Bionic.
Meanwhile, in August 2011, Google has entered into a definitive agreement with Motorola Mobility to acquire it for approximately $12.5 billion. The deal is subject to the regulatory approval and customary closing conditions. We maintain our long-term Neutral recommendation on Motorola Mobility. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.
