Motorola Falls on Rumors of Shortfall

Motorola (MOT Quote) shares slid as much as 9.4% Wednesday on heavy volume amid unconfirmed rumors that the company will miss third-quarter financial estimates.

Tough Talk Motorola over two days

By midday, the shares had bounced back and were down $1.80, or 4%, at $28.75. Volume of 15.8 million shares surpassed Motorola's average daily trading volume.

Motorola said it hadn't changed its guidance to Wall Street.

Paul Sagawa, an analyst at Sanford C. Bernstein, expects "sequential improvement in the operating margins of most of its businesses," specifically the mobile-phone and semiconductor divisions. "Motorola's big problem is being profitable vs. growing its market share," he says, adding that he wouldn't be surprised to see mobile-phone sales volume fall in the period.

Mobile-phone sales were strong industrywide this quarter, Sagawa says, but mostly for cheaper products. Motorola purposely left this market segment in an effort to revamp its products and reintroduce them, he adds.

The company posted earnings of 23 cents a share last quarter. The First Call/Thomson Financial consensus estimate for this quarter is 26 cents. Motorola is expected to announce third-quarter results on Oct. 10.