Motorola still has some issues

Motorola Mobility isn't quite in the clear yet.

That's the opinion of RBC Capital analyst Mark Sue, who says there are still a lot of issues surrounding the manufacturer of handsets and television set-top boxes. His biggest complaints: a slow move into the white-hot 4G LTE segment, too little product diversification at major customers Verizon Wireless and AT&T, and a slow product-development cycle.

Delays in Motorola's LTE devices and its reliance on an aging product portfolio may be contributing to market share losses within the growing Android ecosystem," he said in a research note today.

Motorola is in the midst of a turnaround, having split into two independent companies at the beginning of this year. Motorola Mobility zeroes in on mobile devices and TV-related equipment, while Motorola Solutions focuses on enterprise and government.

Motorola Mobility Chief Executive Sanjay Jha brought the company back from the brink of bankruptcy with his early and aggressive embrace of Google's Android operating system, but Sue believes he needs to move faster now.

Among the recent hiccups has been the delay in 4G LTE products. Sue said the company's decision to develop its own silicon for its LTE chipsets has put it behind key competitors such as HTC, Samsung Electronics, and LG Electronics, each of which have phones at Verizon. Motorola's Droid Bionic was one of four smartphones that showed up at Verizon's 4G LTE showcase at the Consumer Electronics Show in January, but it's the only phone that hasn't hit the market yet.

4G LTE products for Verizon have sold extremely well. The HTC Thunderbolt sold 260,000 units in its first two weeks of sales, and analysts say the Samsung Charge has also been successful.

Likewise, Motorola's promised 4G LTE connection for its Xoom tablet still hasn't arrived. Sue said he estimates Motorola has shipped 350,000 tablets in the quarter and expects a second-generation device in time for the holidays, including a 7-inch device.

While AT&T threw its support behind Motorola's Atrix smartphone, Sue said Motorola needs to get more products to the wireless giant. Likewise, he said the company needs more product diversification at Verizon. He did note that there were some products in the pipeline, including a midtier device for Verizon, as well as the upcoming Photon 4G for Sprint Nextel and Triumph for Virgin Mobile.

"Motorola in our view may need to quicken its product development to participate in this rising Android tide," Sue said.

The company's health will become more apparent when it reports its second-quarter results on July 28.

From an investment perspective, Sue said the stock looks cheap. But the concerns are holding him back.

"For now, we're taking a 'wait and see' approach despite the depressed valuation," he said.