Motorola Mobility, which Google is buying for $12.5 billion, said today that it expects fourth-quarter revenue to fall below Wall Street expectations.
Citing reasons including rising competition amongst other smartphone makers, the company will miss analysts' sales forecasts with projected revenue of $3.4 billion.Analysts had expected $3.88 billion at least.
Motorola Mobility said its revenue forecast included $900 million in sales for its home business section, which makes television set-top boxes.
Motorola Mobility said it would report "modest profitability", but failed to disclose any details on this. Analysts expect the company to report profit after special items of $116.2 million, or 41 cents a share.
Just over half of its 10.5 million mobile phone shipped during the fourth-quarter were smartphone models, it said.
The company also said that it was hurt by legal costs relating to intellectual property lawsuits.
Motorola Mobility is engaged in a legal scuffle with Microsoft regarding U.S. Patent No. 6,370,566, which relates to the scheduling of meetings from a smartphone, ZDNet's Mary Jo Foley reports. The U.S. International Trade Commission found that Motorola Mobility was in violation of Microsoft's patent.
Google is in the process of buying the phone maker for $40 a share in cash. Motorola shareholders approved the deal by 99 percent voting in favour of adopting the merging agreement.
But there is still a chance that the U.S. Department of Justice could step in and block the merger. So far, it has remained silent on the issue.
Google, which makes the Android mobile operating system used on Motorola and rival handset makers, also sought regulatory backing from the European Commission in November last year. While things appeared to be going smoothly for the two companies, the Commission suspended the review until more details were disclosed.
Motorola Mobility said today that it: "currently expects the transaction to close in early 2012 once all conditions have been satisfied".
The company will report its full results after the markets close on January 26th.