Motorola stock dips on fears of 2Q weakness

The Schaumburg, Ill.-based company also lost ground because of worries that economic distress will hurt the sale of its cell phone handsets in the second half of the year, despite signs that competitors are thriving. Motorola is the world's No. 3 maker of cell phone handsets.

Motorola's shares fell 28 cents, or 3.7 percent, to close at $7.18 Monday. The stock has lost nearly three-quarters of its value since October 2006, when it was trading above $26.

Its shares were affected by a negative note from Goldman Sachs out this weekend, in which analyst Simona Jankowski cut the firm's forecast for Motorola's second-quarter and full-year 2008 financial results.

Jankowski said Motorola's handset business likely didn't bottom out in the first quarter, as Motorola had been predicting. Instead, it continued to lose ground in second quarter as market share tumbled and the average selling prices for its products declined, Jankowski said.

That's a troubling combination that signals to Wall Street that Motorola's competitive stance is weakening against rivals like Nokia Corp. and Samsung Electronics Co., the world's No. 1 and No. 2 cell phone handset makers.

Nokia surprised Wall Street last week with a better-than-expected profit in the second quarter. The company also offered a brighter forecast for the global handset market, saying it expects the market to grow 10 percent or more by the end of 2008.

Those factors helped lift Nokia's battered stock, which had fallen 40 percent this year amid investor worries that its business would be hurt by slowing consumer spending in response to the economic malaise in the U.S.

But Wall Street still worries the industry could suffer as economic troubles intensify.

Motorola's stock was also depressed Monday on signs from competitor LG Electronics Inc. that economic uncertainty could slow that company's orders in the second half of 2008.

LG Electronics reported Monday that its second-quarter profit surged 84 percent as South Korean company rang up record mobile phone sales. However, executives said they've started to experience a slowdown in orders this summer and warned they could dip further as consumers pinch off some of their spending on high-tech gadgets.

Motorola is scheduled to report its second-quarter financial results July 31.