Difficult as it may be to believe, struggling Motorola (NYSE: MOT) has managed to "beat estimates" in each of the past two quarters. Will tomorrow morning's fiscal 2007 year-end report make it three in a row?

What analysts say:

  • Buy, sell, or waffle? Thirty-two analysts follow Motorola, giving it 12 buy ratings, 18 holds, and a pair of sells.
  • Revenues. On average, these analysts expect to see sales slide 18%, to $9.62 billion.
  • Earnings. Profits are predicted to fall by half: $0.13 per share.

What management says:
The latest news out of Motorola came just this month, when the company announced it was expanding on its H1 2007 plans to lay off 5,100 employees in a drive to reduce costs. Following those "previously announced workforce reductions," Motorola revealed on Jan. 4 that it laid off another 1,600 workers in Q4, incurring another $90 million in "one-time" charges for severance payments in the process.

Motorola's also dropped a few employees that it perhaps hadn't intended to. Following up on September's poach of Motorola exec Hiren Israni by AMD (NYSE: AMD), Cisco (Nasdaq: CSCO) swiped Moto CTO Padmasree Warrior last month. Oops.

What management does:
You really can't blame the execs for jumping ship, though. When you look at the financials ... well ... let's just say that things look like they'll get worse before they get better. Gross, operating, net -- everywhere you look on the margins front, things have been deteriorating for 18 months straight.

Margins

7/06

9/06

12/06

3/07

6/07

9/07

Gross

31.5%

31.3%

29.8%

28.7%

28%

27.2%

Operating

11.3%

10.7%

9.7%

7.4%

4.9%

2.7%

Net

12.7%

10.3%

8.5%

6.5%

3.4%

1.2%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Forget reviving the company's profit margins to the levels of Ericsson (Nasdaq: ERIC), Nokia (NYSE: NOK), or Apple (Nasdaq: AAPL). This quarter, Motorola will be hard-pressed to avoid overtaking Sony (NYSE: SNE) in the race for the title of "least profitable cell-phone maker in the world." Among the major telco equipment makers, just 26 basis points worth of operating margin separate the two, and I wouldn't be at all surprised to see Motorola and Sony switch places in the rankings tomorrow.

Meanwhile, free cash flow has plunged to levels not seen since -- urghh! -- September 2001, when Motorola last emerged from free cash flow negativity. At this point, perhaps the best we can hope for is that Motorola avoided burning cash in Q4.

For more depressing Motorola news, read:

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