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Moto says hello to disappointment with Q2 warning

End of Zandr line cheers gloomy investors

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Motorola is forecasting another dreary quarter, citing poor sales in Asia and Europe for its lower-than-expected outlook.

Meanwhile, Motorola shares have risen almost 3 per cent on speculation that CEO Ed Zander may be ousted under the heat of a new campaign by an activist investor.

The company's profit warning today declared it now expects second quarter sales between $8.6bn to $8.7bn. The company had previously forecast sales would be flat with Q1 '07 results of $9.4bn. The company has also changed its outlook on the mobile market from the first quarter, and no longer expects the business to be profitable for the full year 2007.

This week, Motorola investor Eric Jackson published a statement entitled "Motorola Plan B" that called for Zander's head.

"What has been Ed Zander's mark on Motorola?" Jackson asked in his statement. "He came with a Silicon Valley background, but how has that experience or those past ties translated into tangible results for the Schaumburg, IL-based Motorola?

"What has he brought to Motorola that is really unique in the last 3 1/2 years? If it's difficult to answer that question, we find it hard to image what he'll bring moving forward, which is why we suggest a change is needed now."

Jackson had previously stirred up dissatisfied stockholders at Yahoo! by asking then-CEO Terry Semel to apologize to shareholders during the company's annual meeting. Semel was replaced one week later.

This year, Motorola has replaced its CFO and acquired an operations chief to help with company restructuring. The company slashed 3,500 jobs in January, followed by an additional 4,000 layoffs in May.

In addition to the forecast, Motorola announced that Stu Reed, head of integrated supply chain operations, would become the company's new executive VP of mobile devices. Reed takes the job vacated by Ron Garriques, who left the company in February to become an executive at Dell. ®

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