Don't Underestimate Motorola's Turnaround Potential

Motorola(MOT Quote) is a stock I have liked for a while. The company just delivered excellent results for the first quarter and guided sales and profits materially higher. The shares have been creeping up lately, but I believe the turnaround potential is still vastly underestimated by investors and Wall Street analysts. Quite simply, many of the sound bites surrounding the company are wrong.

First, the cell phone is still a highly technical product. Emerging new features such as video, music, higher quality cameras, small form factors, VOIP features and others create solid opportunities for innovation and differentiation.

The cell-phone business is not overly competitive. The top five guys have nearly 80% share, with leaders making very good profits. Both Nokia(NOK Quote) and Samsung reported 17% operating margins in the last quarter. Motorola's meager 10% margins offer material opportunity for upside! ...