Jan. 5, 2007

This morning, shares of Motorola Inc. lost more than 10 percent of their overall value following news that lower mobile phone sales forced the company to downgrade its 4th quarter sales estimate.

Overall, Motorola adjusted its 4th quarter earnings forecast to between 13 cents and 16 cents a share, on sales of $11.6 billion to $11.8 billion.

About two months ago, an earlier earnings estimate called for sales to come in between $11.8 billion and $12.1 billion.

Motorola said its mobile phone segment was hit by unfavorable geographical and product-tier mix of sales.

"We are very disappointed with our fourth-quarter financial performance, but we remain committed to our strategic direction and long-term financial targets," said Motorola CEO and Chairman Ed Zander in a prepared statement.

"During the third quarter of 2006, Nokia and Motorola were locked in intense price competition and it looks as though this has continued through the fourth quarter as well," said Ovum analyst Martin Garner in an Ovum Daily Comment brief.

However, Garner noted that Motorola still managed to increase the volume of handsets shipments, which came in at 66 million, up 23 percent sequentially and 48 percent over 2006.

Motorola's stock started to settle a bit around mid-day. Just after noon EST, Motorola shares were down 6.6 percent to $19.18. The company plans to detail objectives designed to improve operating profitability when it announces its complete fourth-quarter results on Jan. 19, Zander said.

A few days ago, Motorola and Sprint announced the Motorola Q smartphone will be available to Sprint Power Vision customers. Online sales will start later this month, while retail store availability will follow in February.

Motorola launched the Q in the United States with Verizon Wireless last year.

Source: Wireless Week