January 9, 2012 8:12 pm

Motorola Mobility

Shares in both Motorola Mobility and Google slipped in early trading after the US smartphone maker which is being acquired by Google for $12.5bn, warned that its latest fourth-quarter revenues would miss Wall Street expectations because of tough competition and legal expenses.

Motorola Mobility’s shares slipped by about 1 per cent to $38.12 on Monday while Google’s stock lost about 4 per cent to around $626 a share.

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Paul Taylor

Motorola Mobility, which was spun off from Motorola at the start of last year and has been pursuing a recovery strategy built around Google’s Android-smartphone operating system, announced late on Friday that its fourth-quarter sales would be around $3.4bn, well below analyst expectations for revenue of about $3.88bn.

The company blamed the revenue shortfall on “an increased competitive environment in the mobile device business and higher legal costs associated with ongoing intellectual property (IP) litigations.” The company is due to officially report its fourth-quarter results on January 26.

In addition, the Libertyville, Illinois-based company which agreed to be acquired by Google in August in large part to bolster Google’s IP portfolio in the face of a slew of lawsuits from Apple and others, said it shipped about 10.5m mobile devices to network operators and retailers in the quarter, including about 5.3m smartphones, which run on Android.

Some analysts had expected Motorola Mobility’s fourth quarter device shipments to total around 15m. The fourth quarter is typically the strongest quarter for mobile device sales and Android-based smartphone sales surged last year.

But the delayed launch of Apple’s updated iPhone 4S early in the quarter appears to have affected sales of Android-based smartphones including those sold by Motorola Mobility and HTC, the Taiwanese smartphone maker.

Motorola Mobility’s revenue forecast includes $900m in sales for the home business, which makes television set-top boxes. But despite the setback, the company said it still expects to report “modest profitability” excluding certain items, in the quarter.

The company added that it is still working with Google on gaining regulatory approval for the proposed deal, which is expected to close early this year.

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