NEW YORK (Reuters) - Motorola Inc. (NYSE:MOT - news) on Tuesday posted a 45 percent fall in quarterly profit and disappointing revenue growth as sales of mobile phones and wireless network equipment were weaker than expected, pushing shares down 8 percent.
The world's second-biggest maker of mobiles also said its sales of high-speed wireless phones were disappointing in Europe, the stronghold of its biggest rival Nokia (NOK1V.HE), which is reporting results on Thursday.
Motorola said third-quarter revenue rose 17 percent to $10.6 billion, which was under the average analyst forecast of $11.06 billion, according to Reuters Estimates.
Reuters Estimates and some Wall Street analysts said the company also missed on earnings per share, but Motorola Chief Financial Officer David Devonshire said it had met expectations after backing out some special items.
"I think (the results are) disappointing for investors because expectations have built up about Motorola's ability to gain share," said Bill Choi, an analyst at Jefferies & Co.
He pointed to strong quarterly results at smaller rivals Sony-Ericsson, owned by Sony Corp (6758.T) and Ericsson (ERICb.ST), and Samsung Electronics Co (005930.KS).
Motorola said it had a 22.4 percent share of the global handset market, up from 22.1 percent in the second quarter.
Investors had expected Motorola to post robust growth helped by new products and the slim Razr phone, and had pushed the stock up 28 percent in the last three months. This compared with a 2 percent rise for Nokia over the same period.
The stock fell $2.08, or 8.4 percent, to $22.77 on the news, after closing at $24.85 on the New York Stock Exchange.
"Both handset and network enterprise revenues were lighter than expected," said Ed Snyder, an analyst at Charter Equity Research. "Basically, they're selling a lot of profitable phones but the revenue that they're getting is lower."
Motorola executives said half the revenue shortfall was due to delayed customer spending on mobile network equipment in Europe, the Middle East and Africa. Sales in Motorola's networks and enterprise segment rose slightly to $2.78 billion.
The executives also blamed weaker-than-expected sales of mobile phones in Europe and said a North American customer had not ordered as many phones based on its iDen technology as expected because the customer was waiting for a new model from Motorola.
The company forecast fourth-quarter sales of $11.8 billion to $12.1 billion -- below average analyst estimates of $12.05 billion, according to Reuters Estimates.
Third-quarter net profit fell to $968 million, or 39 cents a share, from $1.75 billion, or 69 cents a share, a year ago, when it reported 39 cents per share of unusual gains including a gain from its investment in Nextel Communications.
Motorola said it sold 53.7 million cell phones in the quarter, up from 51.9 million in the second quarter and 38.7 million in the third quarter of last year.
But that was below the average 54.75 million expected by four analysts contacted by Reuters, and Motorola's own target of 55 million.
"I think the fact the company was light on sales and has 85 percent of its revenue concentrated on cell phones will plague the stock for at least the next several quarters," said Albert Lin, analyst at American Technology Research.
One bright spot was Motorola's wireless profit margins, which rose to 11.9 percent in the third quarter from 11.2 percent in the second quarter.
"It does look like the big concern over margins is placated. Gross margins were stronger than what we were looking for," said Jefferies' Choi.
