Motorola shares jump on hopes for Google phone

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NEW YORK (Reuters) - Motorola Inc shares rose 6.5 percent on Friday on hopes the company could turn around its loss-making handset business with the new cellphone it developed with Google Inc.

The market’s initial response to the announcement was modest and the shares closed up just 1.5 percent on Thursday, but many analysts took a closer look at the phone --called Cliq in the United States-- later in the afternoon and issued upbeat reports.

Analysts were particularly positive about the phone’s features like easy access to social networking sites like Facebook and Twitter. RBC analyst Mark Sue raised his price target on the shares to $10 from $8.

“Our initial take is favorable, and it seems that Motorola is carving out a niche in the crowded smartphone market by focusing on socially minded demographics as opposed to enterprise users or pro-sumers,” Sue said.

The Cliq goes on sale in the United States through Deutsche Telekom AG’s T-Mobile USA in the fourth quarter, and it will be branded Dext in the rest of the world. France Telecom’s Orange plans to sell it in Britain and France; Telefonica in Spain; and America Movil in Latin America.

Motorola is launching another phone using Google’s Android software later in the year, and Wall Street sees the series as its last big hope to regain the market share lost to rivals like Apple Inc’s iPhone, as well as those sold by Nokia and Samsung.

While many analysts’ first impression of the phone on Thursday had been that it was no iPhone killer, many said it could still help revive the business.

“We believe Motorola needs to sell about 2 million smartphones a quarter to return to profitability in handsets, and the Cliq is a good first step to achieving this level,” said Morgan Keegan analyst Tavis McCourt.

Motorola shares were up 52 cents to $8.49 in late morning trading. They briefly touched a high of $8.62.

Reporting by Ritsuko Ando; Editing by Dave Zimmerman, Phil Berlowitz