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Motorola Sees 'Rocky' Road

The wireless giant warns investors its recovery may not be smooth.

Updated from 2:38 p.m. EST

Motorola

(MOT)

warned Wednesday that investors shouldn't expect an exceptionally speedy recovery from the struggling handset maker.

Finance chief Dave Devonshire told investors at a Bank of America technology conference in New York that the next two quarters "will be rocky." Asked to explain, Devonshire said, "It's not going to be good, but it's not a terminal illness."

Motorola had to slash phone prices in the fourth quarter to keep its sales pace going, but the cuts hammered the mobile unit's operating margins, which narrowed to 4.4%, well below the 10% or so analysts had expected.

Some analysts and investors speculate that without a new blockbuster phone to reinvigorate sales, the company's operating margins may fall further and perhaps turn negative with a recovery more than a year out. Though Motorola has predicted that margins will improve in the second half of the year, Devonshire didn't offer specifics and didn't rule out negative margins.

Asked if his rocky comments meant narrower, or even negative, operating margins, Devonshire replied, "We aren't running a nonprofit company."

Investors didn't come away feeling more confident about the pace of Motorola's rebound.

"If it's going to take 18 months, I don't know if I want to wait," said one money manager at the conference.

The news comes just a month after Motorola reported its

third straight disappointing quarter and warned of soft numbers ahead. CEO Ed Zander responded by promising to cut 3,500 jobs but urged patience on the Schaumburg, Ill., wireless giant's fourth-quarter conference call.

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"It's like falling off the horse real hard," Zander said Jan. 19. "Getting back on isn't so easy."

Just over a week later, activist investor Carl Icahn

demanded a seat on the board and disclosed a big stake in the company.

Motorola's fortunes soared on the popularity of its two-year-old ultrathin Razr phone, but when phone fashion trends changed the company had to offer steep discounts to take up the slack.

The weakness at Motorola has helped revive Finnish phone giant

Nokia

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. And with Motorola preparing no potential blockbuster phones for introduction anytime soon, industry observers fear

Apple's

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iPhone will soon take a big slice of the U.S. business.

Shares fell 26 cents Wednesday afternoon to $18.91.

"It doesn't look good," said the money manager. "You have the iPhone coming later this year and that could take some of the high-end business. It will make things even more challenging."