Cash Flow Upturn Could Carry Motorola Upstream

Editor's note: This is Bill Trent's debut column on RealMoney. Look for more of his commentary on technology and telecom stocks.

Though I consider myself a longer-term investor, I like to take a look at the stocks with unusual option activity on Stockpickr to see if there is anything sufficiently interesting to investigate further. Friday's list was a doozy, with heavy activity listed for deep out-of-the-money October calls for Motorola (MOT - commentary - Cramer's Take), Arch Coal (ACI - commentary - Cramer's Take) and Yahoo! (YHOO - commentary - Cramer's Take).

I dug a little deeper on Motorola, and came away thinking it might be worthwhile, even for those willing to wait longer than until October to see a return.

Motorola held an investor day Friday. It's hard to imagine that would produce an announcement worthy of a 20% up move. One could be forgiven for thinking there's only one such possible announcement: Ed Zander's resignation.

The company has struggled to match the RAZR's success, let alone one-up it. In Zander's own words: "In Mobile Devices, we did not achieve the level of sales and unit shipments that we had expected, primarily in Asia and the Middle East and Africa. Europe, as we have been saying all year, continues to be a challenge." The message boards are downright gruesome.

But if all it took for a 20% up-move in Motorola was a new CEO, the market could be accused of being awfully forgetful. After all, it was just four short years ago that the stock rallied 10% (from a far lower base) on the news that Chris Galvin was resigning to be replaced by Zander. It makes one wonder why Motorola keeps CEOs as long as it does; if I could get a 10% rally on every CEO firing, I'd say Motorola should do it at least once a year.

Zander is credited with putting the RAZR on the fast track and not much else. Why settle for anyone's second-best idea? Give them a few months to put their best one into action, then sayonara! It's time to find someone else, with a new best idea. Call it crowd-sourcing for CEOs.

---

At the time of publication, Trent had no positions in any of the stocks mentioned in this column, although positions may change at any time.

William A. Trent, CFA, is a freelance equity analyst based in the New York metro area. He has been an equity analyst since 1996 and is co-author of Understanding and Evaluating Prospectuses, Offering Documents, and Proxy Statements. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Trent appreciates your feedback; click here to send him an email.