Motorola Mobility shares rise on AT&T pledge

By Reuters
Posted Feb. 3 at 3:27 p.m.

Motorola Mobility shares rose 5 percent after AT&T Inc. said Motorola’s next product would be its flagship phone as the pair look to compete against the new Apple Inc. iPhone at Verizon Wireless.

AT&T, which first showed off the Motorola Atrix phone January 5, has given up its more than three years of exclusive rights to sell the iPhone. Motorola has been seeking new partners since Verizon, its biggest customer, has selling the phone.

The pairing of Motorola and AT&T was not a surprise for analysts. But after shaving as much as 20 percent off Motorola shares in the days after its earnings report last week, investors showed some relief when AT&T said in a Wall Street Journal story that it would push the phone heavily .

AT&T said people would pay $199.99 for the Atrix phone if they commit to a two-year contract — in line with typical U.S. prices for smartphones.

However, analysts were skeptical about the pricing of the what is seen as the device’s most important innovation; an accessory called a lapdoc — a “dumb” device which looks like a laptop computer, but does not work without the phone attached.

AT&T will charge $500 for the phone and lapdoc, implying a $300 price tag for the lapdoc, which on its own would cost AT&T customers $500.

“I think the phone is going to do fine on its own, but people are so conditioned for low smartphone prices, I’m not sure how many will go for the $500 packet,” said MKM Partners analyst Tero Kuittinen.

Avian Securities analyst Matthew Thornton said the lapdoc was overpriced. While the phone might sell well, it would be unlikely to make up for the loss of the iPhone, he said.

“If AT&T’s going to put a bunch of money behind it, it’s going to move. Does it fully counter the impact of losing iPhone exclusivity? No,” Thornton said.

AT&T said it would start pre-orders for Atrix Feb 13. The phone will go on sale in AT&T stores by March 6.

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