Motorola Rejiggers Business Units

"We expect Motorola's other divisions to report in-line results," writes Tero Kuittinen, analyst with Global Crown Capital, in a note. "Unfortunately, the handset division accounts for more than 40% of Motorola's revenues. As such, we believe the good performance of the rest of the company will not rescue the ailing giant."

Shares of Motorola finished down 17 cents, or 2.3%, to $7.08. Competing phone maker Nokia (NOK Quote) was off 1.9% while Ericsson (ERIC Quote) slipped 2.2%. Wireless technology firm Qualcomm (QCOM Quote) fell 1.9%.

Among smartphone makers, Palm (PALM Quote) was flat, Research In Motion (RIMM Quote) slipped 3.3%, and Apple (AAPL Quote) slid 4.8%.

Motorola also announced Monday the acquisition of AirDefense, a privately held wireless security provider founded in 2001. Terms of the deal were not disclosed