Motorola has lowered its forecast for quarterly results due to a shortfall at its mobile devices unit.
The earnings warning made late last night fell far below Wall Street expectations and could be the result of a fiercer price contest between Motorola and its larger rival, Nokia, as well as a greater reliance on emerging markets where cheaper handsets are sold, analysts said.
Motorola said it now estimates fourth-quarter sales of $11.6 billion to $11.8 billion, shy of its prior view of $11.8 billion to $12.1 billion, despite investor hopes for more robust sales from its slim Razr phone and new models like the Krzr.
"They probably cut pricing on the Razr and the other phones didn't make up the difference," said Snyder.
Motorola also said it expects to report net income of 13 cents to 16 cents per share, below an internal forecast compiled at the start of the quarter.
The forecast includes 10 cents per share in special charges, such as investment-related losses, stock based compensation costs and extraordinary tax expenses.
The reduced forecast may also stem from demand in emerging markets like China and India but less strength in western Europe and the United States, Snyder said. He expected Motorola and Nokia shares would trade lower today.
"We are very disappointed with our fourth-quarter financial performance, but we remain committed to the strategic direction and long-term financial targets we discussed at our annual analysts meeting," chief executive Ed Zander said in a statement.
Motorola estimated that unit sales in mobile devices rose 48 per cent to 66 million units from a year ago, but said the results fell short of its expectations based on "an unfavorable mix" of regional and product-type sales. The company did not elaborate further.