(Reuters) -- Motorola Mobility Holdings Inc. warned on Friday that its fourth-quarter revenue would miss Wall Street expectations as it was weighed down by tough competition and legal expenses in what is usually the best quarter of the year.

The company, which has agreed to be acquired by Google Inc., forecast fourth-quarter sales of $3.4 billion -- below analyst expectations for revenue of $3.88 billion, according to Thomson Reuters I/B/E/S.

Motorola Mobility said it expects to report modest profitability on an adjusted basis in the quarter.

It said it shipped about 10.5 million mobile devices in the quarter, including about 5.3 million smartphones, which are based on Google's Android system.

Motorola Mobility said it is continuing to work with Google on gaining approval for their proposed deal, which they still expect to close early this year.

It said its revenue forecast includes $900 million in sales for the home business, which makes television set-top boxes.

The company said the results were hurt by higher legal costs associated with ongoing intellectual-property litigation.

(Reporting by Sinead Carew; Editing by Gary Hill)