Motorola chief lambasts Wall Street analysts

I don't know Christopher Galvin personally, but if I do bump into the Motorola chief executive any time soon, I'd like to shake his hand.

Galvin recently did what many of his CEO colleagues in the network equipment and software business would like to do: He stuck it to a group of Wall Street analysts, saying his company's stock value is lower than it should be because they haven't done their homework.

Pointing to a record that includes meeting earnings targets for the last eight quarters, Galvin challenged analysts to bring their view of his company in line with what he perceives as reality.

It's a particularly bold challenge for Galvin, because Motorola has been an underperformer for some time, with a well-earned reputation for pioneering technology but not following through with commercial products. A good case in point is today's high-speed access technologies: Motorola was an early leader in cable modems, Digital Subscriber Line chipsets and wireless technologies, where it is best known, but it has failed to dominate any of these now-hot markets.

But as Galvin told analysts recently, the plan is in place at Motorola to meet analysts' estimates for earnings through 2001, and the restructuring effort he launched, which included trimming 25,000 jobs and focusing the company on the Internet and data technology, is succeeding.

The question is whether Wall Street still acts on provable plans for steady success, or whether investors lurch from hot property to hot property, bailing out at the inevitable growth slowdown to seek the next new thing. Where technology stocks are concerned, the latter game plan appears to apply more often than not.

Witness the recent downturn in Wall Street's valuation of two Motorola rivals, Ericsson and Nokia. Both are wireless heavyweights but both are also attempting new data initiatives. It took one warning of a growth slowdown in wireless handsets for the whole sector to tumble. In one day, Nokia's stock lost one-fourth of its value. Much of that value had accrued over a 12-month steady rise in Nokia's stock price, built in part on the expectation that the wireless data market is about to explode.

However, this is still technology looking for problems to solve. Yes, it's cool to be able to check stock prices or flight departure times on your telephone - but the real value of the mobile phone is the ability to call your travel agent at the instant United Airlines once again cancels your flight home.

That said, there also is little doubt that the go-anywhere Internet is an ultimate goal, particularly for the coming generation of consumers who already take for granted both the convenience of mobility and the wealth of information available on the Net. But that's a longer-term play and requires a greater attention span than is present today on Wall Street.

Which brings us back to Galvin's pointed criticism of security analysts. While it is reasonable to argue that Motorola is still on the comeback trail, it is also reasonable to argue that analysts need to look a little deeper and brush up their perception of companies that are in the midst of major changes within an industry of constant change. Maybe if a chorus of CEOs is willing to sing backup on Galvin's next performance, Wall Street may start humming along.