Motorola and Apple: Compared, contrasted, updated

I get asked constantly for my take on tech stocks, and it always surprises me that people ask me about Motorola as much as they ask me about Apple or Google. I got asked again yesterday by a fan who stopped by the Waldorf to watch Happy Hour in person what my latest take on Motorola is.

You might recall that I wrote about Motorola, one of my few bullish pieces this year, a few months ago when the stock was at $6 and I compared it to Apple, which I also liked a lot in that article back when it was trading at $137. Let's update that analysis, as it underscores some important trends we've seen as these two stocks in particular and also the broader markets are still up so much since June.

Stock Price: Mot $9.09 (up 45% since last time); Apple $193 (up 35% since last time).

Market Cap: Mot $21 billion (up 45%); Apple $174 billion (up 35%)

Net cash: Mot $3 billion (up $3 billion after monetizing some inventory and other current assets); Apple $33 billion (up $6 billion mostly from operations)

Enterprise Value: Mot $18 billion (up 29%); Apple $141 billion (up 32%)

Both Motorola and Apple are up huge in the last 120 days, up 45% and 35% respectively since June 24, 2009 when I wrote that article. They are "high beta" stocks, which means they tend to move with more volatility and thereby often exaggerate the trends in the broader stock market and that has held true in the past four months -- the S&P 500 is up 16% over the same time frame and the Nasdaq's up about 15%.

Likewise the market cap of these companies has expanded as the markets have run -- and these companies are now valued a lot higher than they were just 120 days ago. Sorta underscores that whole logic from Warren Buffett who tells us to imagine that the stock market is one crazy partner in a small business that changes its mind constantly -- it'll change its mind about what a giant, monolithic company like Motorola is worth to the tune of $7 billion in 120 days and what Apple was worth changed by some $52 billion in the last four months.

Said another way, people have been willing on average to pay some $500 million more per day for the company called Apple every day for 120 days . Has Motorola's business outlook gotten that much better in the last four months? Has Apple's prospects improved by 45% in the last 120 days?

Perhaps, as they have both reported quarterly earnings that were a lot better than what Wall Street's analysts had been expecting, and more importantly, both have rolled out important new products that will help them take market share.

Apple's $99 iPhone price point, which I cited in that last article, has really made the iPhone a mainstream gadget and even high schoolers making minimum wage can work 20 hours and afford an iPhone. Watch Apple continue to take huge market share away from Nokia, Samsung and others.

And the Droid phones from Motorola are finally here and Verizon's looking to push them hard and they'll find a lot of receptivity overseas too. Remember that Motorola had 20% market share and used to ship 200 million phones per year. That's down to 60 million lately, but Motorola's likely to see 10s of millions of unit growth in the next two years, no matter what happens to the broader cell phone industry, which will likely be stable to down over the next year.

I mentioned on Happy Hour a few weeks ago that Motorola's stock price, rather coincidentally, is likely to move in tandem with the company's cell phone market share -- the stock's been in the single digits since the company's market share went to single digits and it used to be above $20 a share back when the company's market share was above 20%. Just sayin'.

The upshot is that Motorola's still a pretty good long side bet here if only because they are so well positioned to take market share and their balance sheet is manageable and improving.

Apple's still a great company and the iPhone and iMac are both going to continue taking big market share. I'd rather wait for a pull back to buy it, but it's still a darn good stock.

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