Motorola Mobility Shares Down As iPad 2 Wows Analysts

Shares of Motorola Mobility (MMI) slumped Thursday as Apple Inc.'s (AAPL) new iPad won rave reviews.

Motorola Mobility shares were recently down 5.2% at $26.90.

Cowen and Company downgraded the stock to neutral from outperform, a day after Apple took the wraps of the iPad 2. Apple shares were up nearly 2%.

"Motorola Mobility's window of opportunity to establish Xoom looks to be narrowing more rapidly than expected as Apple's iPad 2 launches in the U.S. next week at mostly sub-Xoom price points and sporting a stronger than anticipated feature set," analyst Matthew Hoffman said in a note.

Hoffman said he still expects Xoom, which launched recently, to "find a home among hardcore proponents of the Android operating system/ecosystem, given it is a solid first product for that key developer community."

But he said the "arrival of a much thinner, still-cheaper" iPad 2 "leaves us less optimistic about the Xoom's near-term prospects."

Analyst Tero Kuittinen of MKM Partners offered a different view, arguing that Motorola is well-positioned in the expanding tablet market with its dual-core chip and use of Honeycomb, the latest version of Google Inc's (GOOG) popular Android operating system.

Motorola Mobility, Kuittinen said, is also poised to become "the vanguard of launching quad-core tablets and phones in the second half of 2011."

"We believe Motorola has a chance to top four million units in tablet sales in 2011 thanks to multiple form factors and expected international traction," Kuittinen wrote.

-Benjamin Pimentel; 415-439-6400; AskNewswires@dowjones.com

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