Let's just say that the day looks ugly for mobile-phone manufacturer Motorola. Late yesterday, the company lowered its earnings and sales guidance for the fourth quarter, thanks to an unfavorable geographical and product mix of mobile-phone sales that hurt margins and the average selling price. MOT, the second-ranked phone producer in the world, announced that fourth-quarter sales will come in between $11.6 billion and $11.8 billion, lower than its previously forecast range between $11.8 billion and $12.1 billion. MOT also forecast earnings between 13 and 16 cents per share, including 10 cents of charges on investment-related losses, stock compensation expenses, and business reorganization and unusual taxes. Adding the 10-cent charge back in, the results would still fall short of the Street's expected earnings of 39 cents per share on sales of $11.99 billion. In German trading, MOT was five percent lower.

It should come as no surprise that the brokerages have been stumbling over each other to issue downgrades this morning. Piper Jaffray cut MOT to market perform from market outperform, citing the belief that it could take several quarters for the firm's handset operating margin to recover. Jaffray told clients that it believes the average selling price of MOT's phones in the fourth quarter will tally roughly $120, compared to an estimate of $135. The brokerage also noted that the company's KRZR model has not sold well, despite store-manager recommendations, thanks to its high price tag. CIBC World Markets cut MOT to sector performer from sector outperformer. Bear Stearns cut MOT to peer perform and Deutsche Bank cut the firm to hold. That wasn't the only brokerage action this morning, as Deutsche Bank cut MOT's price target to $19 from $22; Lehman Brothers cut its target to $22 from $27; Morgan Stanley cut its target to $25 from $26; Jefferies cut its target to $27 from $30; and RBC Capital cut its target to $24 from $26.

The 20 level has provided a measure of support for MOT in the past, but will it hold up to the onslaught that should be expected this morning? Zacks shows that 18 of the 24 analysts following MOT rate it a buy or better. A barrage of downgrades from this uber-optimistic group could put the 20 level to a stern test. In addition, there is little in the way of potential short-covering support for MOT to help buoy the stock. However, options players may not be surprised by a drop. MOT's Schaeffer's put/call open interest ratio of 0.79 is higher than 89 percent of the past year's worth of readings, nearing a bearish extreme.