Pity Motorola (NYSE:MOT).

The boys from Schaumburg just can't catch a break these days. No sooner had the firm's shares stabilized after last week's earnings warning (which sparked an 8% slide in share price on Friday) than out comes Steve Jobs of Apple (NASDAQ:AAPL) with the introduction of his firm's much-heralded iPhone. Though Motorola shares barely budged, Research in Motion (NASDAQ:RIMM) took a 6% haircut, Palm (NASDAQ:PALM) dove 3%, and Nokia (NYSE:NOK) and Ericcson (NASDAQ:ERIC) lost about 1% each.

The iPhone will certainly generate its share of press, though, and I understand that my Foolish colleague Tim Beyers will be giving us the lowdown on the latest Mac attack tomorrow. So today I'll limit this column to reviewing the import of Motorola's earnings warning, which came out late Thursday evening last week.

Briefly, what Motorola said was this:

  • Sales will fall about $200 million to $300 million short of previous guidance, coming in most likely in the range of $11.6 billion to $11.8 billion.
  • Profits per share will likewise miss the internal forecast, approximating $0.13 to $0.16 per share, net. Detracting from those earnings, and most likely ignored by most analysts, will be the usual slew of non-cash "one-time items" such as stock-option expensing, charges for reorganizations and "investment-related losses," and "unusual" taxes.
  • Margins will suffer badly. According to management, it actually beat its own predictions for cell phone sales, moving 66 million units' worth of product, a 48% volume improvement over last year's Q4. Unfortunately, it has had trouble selling its higher-priced phones, and a good portion of the sales it did make appear to have been low-end phones, many of which were likely sold in the developing world. Those kinds of sales look great when factored into the market share numbers -- but I dread seeing what they'll do to margins when Motorola reports its Q4 numbers a couple weeks hence.

And the good news? Basically, the only good news included in the release was that the company expects to generate positive cash from operations. Well, I certainly hope so! After all, the firm generated well over $2 billion in cash flow in last year's fourth quarter. A reversal to negative cash flow in this month's news would be an unwelcome development, indeed.

By my calculations, the firm's cash-generating prowess now has it trading at less than 11 times free cash flow (FCF). Net out the $10.5 billion (net cash) war chest, and the business proper trades at a downright cheap eight times FCF. If the numbers we see later this month even remotely resemble these, I'll almost certainly be adding Motorola to my own Foolish portfolio -- earnings warnings and iPhones be, er, darned.

For mo' Moto, mosey on over to:

Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.