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tried to sing the euro blues Wednesday morning. But the market and analysts only heard off-key notes.

The second-largest mobile-phone manufacturer's shares fell as much as 22% earlier today to $20.50 following an early morning, third-quarter earnings conference call in which the company lowered its financial estimates for both next quarter and next year.

Motorola execs pointed fingers at the euro along with declining worldwide handset sales as culprits for the negative guidance. The call came on the heels of the release the previous night of third-quarter earnings per share of 26 cents -- in line with analysts' expectations, according to a

First Call/Thomson Financial


The market was not pleased, although the shares had bounced back a bit by midday and were down 15%.

Morgan Stanley Dean Witter

downgraded Motorola from strong buy to outperform, and

Prudential Securities

downgraded the stock from a strong buy to accumulate and slashed its 12-month price target by 58% from $67 to $28.

On the call, Motorola said a weak euro dragged down fourth-quarter operating margin estimates from between 8%-8.5% to 6.5%, while revenue and earnings per share estimates for next year have been cut by $3 billion, or 6%, to $44 billion and $0.22, or 15%, to $1.20 respectively.

In response to a question by Laurence Borgman of


about what helped drive the third-quarter increase in the handset division's operating profit margin, which rose to 6% from 4% last quarter, Motorola executives pointed to both a move away from low-end mobile phones and improvements in streamlining the manufacturing process.

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Regardless, the market was focused on future margin growth rather than the most recent improvement.

Chase H&Q

analyst Ed Snyder says, "At the very minimum, management's credibility takes a hit."

Snyder, along with many of his peers, began preparing a note on Motorola addressing the new estimates. (Chase H&Q has so far maintained its buy rating and hasn't performed underwriting for the company.)

Other analysts were mixed on the explanation the company gave for the negative guidance. "It's a combination of things," according to

Deutsche Bank

analyst Brian Modoff. "Motorola is not well positioned in Europe, but the euro really affects them too." (Deutsche Bank hasn't performed underwriting for Motorola, but the bank has put its rating on the company under review.)

But Europe wasn't the only worry. Motorola said its estimates for worldwide mobile-phone sales are now considerably slimmer than what were generally accepted ranges earlier this year.

The company says it expects worldwide mobile-phone sales of between 410 million to 420 million in 2000, and between 525 million to 575 million in 2001. These numbers are down from estimates of 425 million to 450 million and 600 million, respectively. Prudential analyst Pete Peterson likened the new estimates to "a bucket of cold water."

Mobile-phone watchers are now waiting with baited breath as to whether


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, the other two leading mobile-phone manufacturers, will unleash any surprises on the market. Those companies are expected to report earnings later this month.

In afternoon trading Wednesday, Nokia was down 4% to $33.56; Ericsson was unchanged at $14.19.