Motorola's Cable Modems Feel Heat
By Trefis.com
Motorola
( MOT), which primarily makes money by selling mobile phones, also leads in the cable broadband modem market in which it competes with
Cisco
(CSCO) - Get Report
,
Arris
(ARRS) - Get Report
,
Ambit
and
Thomson
. Motorola's cable modem market share, however, has declined steadily to 30% in 2009 from 40% in 2005.
We believe that Motorola's cable broadband modem market share will continue to decline due to increasing competitive pressures primarily from Cisco and Arris, reaching about 27% share by the end of Trefis forecast period.
Broadband modems provide connectivity to high-speed Internet delivered over cable or DSL connections. Motorola sells cable and DSL modems to cable companies like
Comcast
(CMCSA) - Get Report
,
Time Warner Cable
(TWC)
and
Cox Communications
that in turn provide broadband services to end users.
We estimate that broadband modems constitute only 1% of the $7 Trefis price estimate for Motorola's stock. In comparison, Motorola's digital TV boxes business makes up around 13% of Motorola's stock.
Despite serving the same customer base as the cable modem business, the digital TV boxes business is worth more for Motorola since digital TV boxes are priced on average seven times higher than cable modems. As a comparison, Cisco's digital TV boxes business constitutes only about 6% of the $23 Trefis price estimate for /Cisco's stock.
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