Motorola's (NYSE: MOT) handset business had a global market share of 22% two years ago after it launched its successful RAZR, but that turned out to be a "one hit wonder". On a good day, MOT's share of worldwide handset sales is 12%.

Motorola is spinning its handset operation out to the public, but it has done so poorly; it is hard to see what the public will get. The head of the new company does what all CEOs do when they are in trouble. He fires people.

Sanjay Jha, the just-hired chief executive, will also begin to adopt Google's (NASDAQ: GOOG) Android phone operating system for many of the company's new models. According to The Wall Street Journal, "Motorola is hoping that the open-source Google platform can attract developers of sophisticated applications."

Those plans are not likely to work. For starters, the Android software system is new and so far there is no evidence it will be widely adopted. While its use may spread, betting on something so novel has tremendous risks.

The other, more vexing problem is that Motorola has not had a handset design that has been a big hit with consumers in over two years. No matter what OS the company is shipping on its phones, unattractive and feature-poor products are not going to get MOT back in the game.

Product. Product. Product. Motorola does not have one. Everything else is academic.

Douglas A. McIntyre is an editor at 247wallst.com.

Motorola Inc. (NYSE: MOT) just can't seem to find a sliver of good news to hang on to these days. The cellphone manufacturer based outside of Chicago saw its shares hit a five-year low this week as the outlook for its cellphone division continues to worsen. The company is in the midst of preparing to spin off the division to rid itself of that baggage. It's a sad state when that "baggage" is what defines Motorola.

Motorola contract manufacturer FoxConn had some cautious words to say this week as well, which probably helped propel Motorola's shares downward to $7.61, a level not seen since May 2003. After losing $194 million in the first quarter alone, it's just bewildering to see how such a great company completely lost its way, financially speaking.

It's not getting any better. The company's product launches have been described as a "half-baked mess" and it can't seem to find a knack for the cellphone handset design that it made so famous years ago with the RAZR. Motorola certainly isn't a one-hit wonder, but in the brutal cellphone market you need a hit every year to stay at the top of your game. Korean giant Samsung Electronics passed Motorola by in 2007 to become the world's second-largest cellphone manufacturer by having a whole host of cellphone designs available to almost every wireless carrier in the world. That's just for starters, but for Motorola, it seems to be an impossible goal at the moment.

Motorola Inc. (NYSE: MOT) seems to be in the midst of a crisis, even as it prepares to split itself into two companies to give shareholders more visibility into just how bad one part of its business can be while the other piece can be, well, not so bad. Of course, I'm talking about the wireless giant's cellphone division, which is still in the top three worldwide in terms of sales. It's sinking faster than a rock, though. How did this come to pass?

After reading a missive by a former Motorola employee, Numair Faraz, who worked closely with the late Geoffrey Frost -- Motorola's former Chief Marketing Officer and father of the RAZR handset -- one has to wonder about a few things. For example, just what kind of incompetence has brewed in the corner office for the last three years? From reading Faraz's words, both former CEO Ed Zander is pitched as a complete idiot and slave driver who literally worked Frost to death and current CEO Greg Brown is pitched as a technological moron who can't even use email (his secretary prints off messages to read to him later). Are these truths? They sure could be.

Zander, who was highly regarded when he came back in 2004 to take over for CEO (and grandson of company founder) Chris Galvin, seemed to have everything going for him. Looking back, nothing ever went right for Zander. The RAZR that gave Motorola its two-year recognition was in the works before he arrived. What did Zander -- a former president of Sun Microsystems (NASDAQ: JAVA) -- do during his tenure with Motorola?

Swipe big chunks of compensation while churning out middling performance, according to many on Wall Street and Faraz as well. Maybe Galvin was not such a bad CEO after all, right? When Faraz said in 2003 that "Motorola's biggest problem is that Samsung kicks ass," he wasn't kidding -- and that's precisely what happened. Seems to be another example of very sub-par performance being rewarded with a golden parachute, while shareholders get shafted once again. Motorola stood at under $10 a share early today.

Last night, handset maker Motorola Inc. (NYSE: MOT) announced that it would be slashing another 2,600 jobs as the company continues to battle lower sales. The current job cuts represent approximately 4% of its total job force as of the end of 2007 of 66,000 employees.

It wasn't that long ago that Motorola was a major force in the world of mobile phones, but over the past two years the company has definitely fallen from grace among consumers. Two years ago the company was the world's second largest handset maker, but that status is no more, and the company is currently sitting in the fourth spot overall.

Analysts have blamed the company's drop due to lack of innovation, and some have gone so far as to predict that the company's handset business is doomed if Motorola can not pick up the pace and start to pump out new and fresh ideas for consumers to gobble up.

Motorola Inc. (NYSE: MOT) was hit with downgrades late in the week. Some analysts think that it sold only 40 million handsets in the fourth quarter. Rival Nokia Corp. (NYSE: NOK) usually moves about 100 million. The Razr's success is now just a memory.

Citi Investment Research lowered its price target on Motorola from $22.50 to $18.50. Most shareholders wish that the stock would hit the lower number. In after-hours trading on Friday, the shares fell to $15.

There has been much talk about breaking the company into pieces. When the company traded at $20, that was less likely. But, the MOT market cap is now only $34 billion.

Motorola Inc.'s (NYSE: MOT) management is trying to convince Wall Street that the company can be turned around. In meetings Friday, CEO Ed Zander referred to the past success of the RAZR and said that the company could get back there again. "We've done it, we've been there," he said. "We've got to get back on it, and do it not for three years but 30 years." Other managers from the firm predicted that a new handset success would emerge from relying on server models and not just one mega-hit.

But, it is probably too late. Nokia Corp. (NYSE: NOK) has raised its share of global handset sales to about 36%. Motorola's has fallen to 16% from 22% at it peak a year-and-a-half ago. And sharp improvement in sales at Samsung and Sony Ericsson means that there are at least two other strong competitors.

Motorola also has to worry about what the sharp cut in the price of the Apple (NASDAQ: AAPL) iPhone will mean to the market, especially once that product goes on sale in Europe and Asia.

Motorola has two other large divisions -- its enterprise telecommunications equipment operation and its set-top box business. Both of these do fairly well. Whether all three units belong under one roof is an issue that the board should review.

But getting back its market share in the handset business is unlikely to happen. The company cannot even point to a specific plan.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Motorola Inc. (NYSE: MOT)'s desperate attempt to dig itself out of profitless quarters and a huge backlash from the financial community against CEO Ed Zander is coming to a head this month. Later this month, Sprint (NYSE: S) is set to release Motorola's RAZR 2 handset, which has officially been termed as the successor to the original RAZR mobile handset that took the world by storm at the end of 2004 and ended up selling more than 50 million units through its lifespan (which continues today).

Aside from its success with that single product launch in 2004, Motorola has encountered many failures, with product delays, uninspired and RAZR-esque handsets that have no new designs, component shortages, inventory projection misses and just plain boredom. Customers all over the world have sought out trendier designs from competitors Nokia (NYSE: NOK), Samsung and LG (NYSE: LPL) (among many others) and Motorola just kept churning out the same thing in different forms (like flip phones, slider phones and "candybar" phones) for years. Due to not making any money and with sales slowing way down, Zander was on Carl Icahn's noose just a few months back.

Can the RAZR 2 save Motorola? I've pondered this a few times before, and the proof will start to form in the pudding here in a week or so. Once Sprint releases the RAZR 2 for $250 and Verizon Wireless (NYSE: VZ) follows it with an approximate $300 price tag, AT&T Inc. (NYSE: T) will follow -- hopefully in September -- with its own version. Once the RAZR 2 is at the three largest wireless carriers in the U.S., we'll know by the end of this year if it will sell like gangbusters and help rescue Motorola or if mediocre RAZR 2 sales will be the ultimate nail in Ed Zander's coffin at Motorola. Place your bets now.

Motorola (NYSE: MOT) pre-announced a second quarter shortfall and also indicated that the rest of 2007 will be difficult and non-profitable. The stock will more than likely be dead money for the next six to nine months as this company has yet to find its footing.

I wrote back on June 26th that Motorola would probably miss this quarter and perhaps the year. It has come true. Motorola is a company that is in trouble as it cannot make an operating profit on almost $9 billion of quarterly revenues. Motorola is attacking the European markets with mid-level product that is constantly under pricing pressures. The Motorola approach in Asia and China has been to penetrate the low-end of the cellular market which is also contending with evaporating margins.

Motorola had success with the Razr line-up of phones but has yet to come up with a killer-replacement phone and the Razr cycle has worn out its welcome.CEO Ed Zander, rightfully, is under huge pressure to perform as this once bellwether company is facing not only a tough 2007 but a challenging 2008. With Apple's (NASDAQ: AAPL) iPhone capturing market share and headlines, Motorola is hard pressed to maintain its competitive positioning in the United States.

Motorola's stock closed at $17 yesterday and I see little to any near term prospects of it lifting higher. Motorola stock may start to be interesting at the $14 level, but not until then.

Georges Yared is the Chief Investment Strategist of Yared Investment Research.

You will be reading this article on Monday June 25th -- just 4 days before the launch of the Apple's (NASDAQ: AAPL) much anticipated iPhone. Analysts are gingerly trying to re-model the September 30, 2008 fiscal year: how much can iPhone contribute? How much visibility can iPhone provide to Apple's numbers for 2008, 2009 and beyond. I distinguish between "contribute" and "visibility" because Apple is going to recognize the iPhone revenues over the 24 month subscriber-contractual period.

iPhone will most likely re-set the standards for the cell phone industry. The hype surrounding the iPhone has been huge: the early adopters will provide all the headlines necessary to keep the iPhone front and center. The Apple retail store at the Mall of America outside Minneapolis expects record foot traffic and of course, sales. A senior employee told me that the interest has been "way, way more than expected".

Apple has guided the Street to expect sales of the iPhone at 10 million units by the end of 2008. This number is extremely conservative. For a point of reference, Motorola (NYSE: MOT) sold 50 million RAZR units between 2004 to 2006. The iPhone is, in a nut shell, simple to use and elegant. The software functionality will set it apart from all other cell phones. My prediction is the iPhone will be a run-away success for the next 3-5 years. So what about Apple's stock?

Cowen & Company recently cut its forecast for Motorola (NYSE: MOT), saying that the company's handset margin would drop to 15.8% during the quarter. It peaked last year at 22%. But now, due to the company's failure to replace the RAZR with another popular model, rival Nokia (NYSE: NOK) has said that it can increase its share above the current level of 36% worldwide.

Motorola must also deal with the introduction of the Apple (NYSE: AAPL) iPhone, and a ban on Qualcomm (NASDAQ: QCOM) chips may force the company to delay some models.

Now the Carl Icahn's bid to join the board has been beaten back, there is little to hold up the company's shares. Short interest in June rose 13.6 million to 139.3 million. Since October, shares in the handset company have fallen from over $26 to about $18.

Motorola has stepped up cost cuts, saying it will cut another 4,000 this year to push its saving from lay-offs to $1 billion. But fewer and fewer investors believe that slashing personnel is the answer to the company's troubles.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Once it was clear to Motorola Inc. (NYSE: MOT) that its handset business was falling apart, the company said that it would cut 3,500 of its 66,000 employees. That was in January.

Today the company said another 4,000 would have to go, and that the move would save about $600 million annually. The announcement adds to a fairly stunning set of reversals for the company that was riding high on the sales of its RAZR phones in 2005 and early 2006. The stock ran like a scalded dog from $17 two years ago to over $26 in October of last year.

Then, it became apparent that the RAZR had no legs. Competitors including Nokia Corp. (NYSE: NOK), and Sony-Ericsson were coming to market with more attractive products. These companies were also building cheaper phones that were well-suited to markets like India and China. Motorola had put too much of its bet on one model. By early May, the shares were back to $17.

Outside investors found some hope in Carl Icahn's purchase of shares and attempt to get onto the Motorola board. But, CEO Ed Zander cursed Icahn like a sailor and got enough shareholders behind him to keep Icahn out of the company. Zander did not even have the guts to be quoted in the company's PR about the layoffs. It was left to the COO and CFO to shoulder that.

Firing people may help the stock price for a day or two, and it may cut costs. But, until Motorola can show sales figures indicating that it has models to get back the market share it has lost, getting investors into the stock is going to be very tough.

Douglas A. McIntyre is a partner at 24/7 Wall St.

If Carl Icahn wins a seat on Motorola Inc.'s (NYSE: MOT) board of directors, Chief Executive Ed Zander will be looking for another job. That might happen if Icahn looses too.

The billionaire activist investor today stepped up his campaign against Zander ahead of the company's annual meeting on Monday with full-page advertisements blasting the embattled CEO, according to the Wall Street Journal (subscription required). He criticized comments Zander reportedly made about "hating" his customers as being "straight out of Alice in Wonderland."

How Zander and Icahn will be able to work together if the one-time corporate raider prevails is beyond me. I also wonder how effective Zander can be following Ichan's brutal proxy fight.

In an effort at damage control, Motorola said Zander was "joking" about "hating" Motorola's customers, the Journal said. Shareholders, though, seriously have found little to like about Motorola who stock has plunged more than 18% this year. The company's recent first quarter earnings were lousy and the second quarter isn't looking that great either.

Though proxy battles aren't easy to win, Icahn stands a good chance of prevailing with Motorola. Icahn probably wouldn't stay on the board for long anyway if he won. He doesn't seem to operating companies as much as shaking them up.

The Apple Computer Inc. (NASDAQ: AAPL) iPhone A-bomb was dropped yesterday at MacWorld. In addition to Apple's rise of over 8%, what is the aftermath now that the smoke has cleared?

• The biggest impact was in the "smart phone" space, with Research in Motion Ltd. (NASDAQ: RIMM) and Palm Inc. (NASDAQ: PALM) both getting killed yesterday. RiM dropped 7.85% and Palm dropped 5.69%, most likely because in less than two hours, Steve Jobs proved their phones weren't so smart after all.
• There was a smaller wake left in the traditional handset manufacturer space, with Nokia Corp. (NYSE: NOK) and Motorola Inc. (NYSE: MOT) each dropping a little over 1%. I found this mildly surprising, as the trendy teen market that spends on phones like the Motorola RAZR would seem to me to be the most likely to rush out to buy the iPhone, regardless of its high price point.
• There was absolutely no effect in the telecommunications space. AT&T Inc. (NYSE: T), which owns Cingular, rose a meager 13 cents on the news that it would be the exclusive carrier of the phone, and Verizon Communications (NYSE: VZ) also rose slightly despite getting left out. Sprint Nextel (NYSE: S) went to hell yesterday, dropping over 11%, but that was due to an unrelated announcement regarding the company lowering guidance. The lack of movement in telecom signals to me the market's belief that Cingular's exclusivity deal will not last that long.
• Apple rival, Microsoft Corp. (NASDAQ: MSFT) also wasn't affected, rising 3 cents on the day, most likely because if the Microsoft Zune couldn't compete with the current generation of iPods, the iPhone being far superior was irrelevant.

Motorola's stock had an extraordinary showing in the quarter ending September 29. The stock rose 25% to $25. Much to the dismay of Nokia, Samsung, and Sony Ericsson, the US cellphone company and it RAZR won't go away. Along with strong year-over-year growth the last two calendar years, the company's last quarter was extremely strong with revenue of $10.5 billion and operating income of $1.5 billion.

Sony Ericsson recently opened a factory in China in the hopes of picking up share from Motorola, Inc. (NYSE: MOT) and others, but "it's the product, stupid." In 2003, Nokia had 40% of the global share in handsets, but Motorola's thin phones are becoming a hit in emerging markets as well as places like the US. And, MOT is hardly standing still. It is moving deeper into the video delivery market. It is also improving its share of the enterprise wireless business which is spearheaded by its purchase of Symbol Technologies.

Perhaps as important as all of these other initiatives is the company's move into WiMax with partners Samsung and Intel. Sprint has already adopted the tech for its next generation broadband-enabled phones, and the technology is in trial in dozens of countries around the globe.

Wall Street is bidding up Motorola because it is one of the few big tech companies that is hitting on all cylinders. If the company does not have any significant missteps, the rise in share price may continue.

Douglas McIntyre is a partner at 24/7 Wall St.

According to a posting on the always-speculative Thinksecret.com, an agreement has reportedly been signed between and Apple and Cingular to offer the iPhone exclusively through Cingular for the first six months after the phone is launched.

Since I use Verizon, as do most of my Apple-enthusiast friends, I guess we'll just have to wait even longer for this much-ballyhooed Apple-branded handset. Either that, or I can follow the herd in switching mobile service providers -- as was the case when RAZR hit the market a little less then two years ago.

Apple's phone will reportedly feature a candy-bar design with a 2.2-inch display and 3MP camera. Robust iTunes and iSync support will also be delivered with the phone. Insiders say Apple is internally estimating that shipments of the iPhone will top an astonishing 25 million in 2007 alone. In contrast the RAZR has sold more than 50 million units since its launch in late 2004.

The release date for the phone is rumored early 2007 and look for it to sweep through college campuses following its release. On my campus, the scuttlebutt has already started.