updated 1/18/2007 12:36:28 PM ET 2007-01-18T17:36:28

Motorola Inc. shares tumbled Friday after warning that a shortfall in its mobile devices will cut into its fourth-quarter sales and earnings estimates.

The world’s second largest cell-phone maker said late Thursday it expects to earn 13 to 16 cents per share on sales of $11.6 billion to $11.8 billion, versus a prior sales range of $11.8 billion to $12.1 billion. The earnings estimate includes about 10 cents per share in charges. Motorola said the new estimate is below its earlier internal forecast at the start of the quarter.

On average, analysts surveyed by Thomson Financial forecast a profit of 39 cents per share on sales of $12 billion.

Its shares fell $1.94, or 9.4 percent, to $18.60 in premarket trading on Friday. They are below the previous 52-week low of $18.66.

Motorola said an “unfavorable geographical and product-tier mix of sales” cut into the mobile device segment. Quarterly mobile devices unit sales were about 66 million units, up 23 percent from the third quarter and 48 percent from the fourth quarter of 2005.

“We are very disappointed with our fourth-quarter financial performance,” said Ed Zander, chairman and CEO, “but we remain committed to the strategic direction and long-term financial targets we discussed at our annual analysts meeting in July 2006.”

He said the company would “discuss plans to improve operating profitability” when it announces fourth-quarter earnings on Jan. 19.

The news caused several brokerage houses to cut their ratings on the company.

Oppenheimer & Co. called December’s results “disappointing” and cut its rating of Motorola from buy to neutral, according to analyst Lawrence Harris.

“We expect that needed changes to the company’s high-end product portfolio will require several quarters to implement,” Harris said.

Motorola is second only to Nokia Corp. in cell-phone manufacturing.

Both the networks and enterprise and the connected home segments are expected to meet or exceed internal expectations, Motorola said.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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