Sell Motorola on Xoom failure, Lost Android Momentum

Shares of Motorola were slammed by the market on Monday after analysts expressed poor performance on what should be strong points for the company.

The company (MMI) shed nearly 2 percent, or 42 cents to hit $22.40 after BMO Capital Markets analyst Tim Long cut his rating on the stock to Underperform from Market perform.

The reason? Poor performance from its Google Android based smartphones and its Xoom tablet failure.

We believe MMI had somewhat of a first-mover advantage in Android Smartphones, Long told investors.

Now that Samsung, LG, and Sony Ericsson have ramped, and HTC continues to lead, we see the field as much more crowded. We will likely see more competition from low-end players like Huawei and ZTE in markets like China and Latin America.

Long goes on to say that he believes Motorola's Android market share fell from 33% in 1Q10 to 14% in 1Q11.

Beyond that, Motorola has attempted to break into the tablet market -- essentially controlled by Apple -- with the launch of it's Xoom tablet earlier this year. That was dead on arrival, however, Long says.

MMI's entry into the tablet market was unsuccessful, in our view. We have been cautious on Android tablets in general given the lack of initial traction for the Honeycomb OS.We believe the Xoom was overpriced, and future products may have the same issues.

Long cut his 2011 EPS estimate to 73 cents from a prior 86 cents, and cut his 2012 estimate to 86 cents from a prior $1.20. He notes that his 2012 estimate is about half what the Street is still estimating.

He cut his price target to $26 from $19.