Mobile-handset designer and telecom infrastructure specialist Motorola (NYSE:MOT) is set to report second-quarter earnings tomorrow morning.

What Fools say:
Here's how Motorola's CAPS rating stacks up against some of its peers and competitors:

Company

Market Cap (Billions)

Trailing P/E Ratio

CAPS Rating

Apple (NASDAQ:AAPL)

$139.7

30.8

****

Cisco Systems (NASDAQ:CSCO)

$130.0

17.2

****

Nokia (NYSE:NOK)

$101.3

11.7

****

Research In Motion (NASDAQ:RIMM)

$66.5

43.6

**

Motorola

$16.9

N/A

**

Data taken from Motley Fool CAPS and Yahoo! Finance on July 30, 2008.

CAPS players with a bullish opinion on Motorola often cite the stock's low, low price. But the bears are unimpressed by the current lineup of handsets, in light of impressive smartphones such as Apple's iPhone and the various BlackBerrys, and they like to suggest that the cell-phone division should be spun off so the company can concentrate on network infrastructure instead.

What management does:
Mayday! Man overboard!

Trailing net margin plunged into negative territory two quarters ago, and looks like it's ready to go even deeper. Sales stopped growing and started shrinking before that, and cash flows followed suit a bit later. Motorola is in a desperate situation these days.

Margins

12/06

3/07

6/07

9/07

12/07

3/08

Gross

29.8%

28.7%

28%

27.2%

28.2%

29.1%

Operating

9.7%

7.4%

5%

2.8%

2.2%

2.2%

Net

8.5%

6.6%

3.4%

1.2%

(0.1%)

(0.2%)

FCF/Revenue

6.6%

5.1%

3.9%

1%

0.5%

(0.6%)

Y-O-Y Growth

12/06

3/07

6/07

9/07

12/07

3/08

Revenue

21.3%

14.9%

2.6%

(5.7%)

(14.5%)

(18.8%)

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:
Megainvestor Carl Icahn is the main proponent of a Motorola break-up that would separate handsets from everything else, and the company has been looking for buyers for months without much success.

The company just reorganized its business units, splitting the old "home and networks mobility" segment into three pieces. Setting wireless telecom equipment aside from cable networking and high-tech broadband solutions might be in preparation to sell handset design and cell-phone infrastructure operations in a package deal. With a structure like that, perhaps infrastructure giant Ericsson (NASDAQ:ERIC) might give Motorola a sniff, and we've all seen how hungry Cisco can be for sensible pathways into the consumer space.

Until we see an announcement of a deal like that, it's best to assume that Motorola is stuck with its underperforming cell-phone operations, and that the light at the end of the tunnel is both dim and distant. Anything else would come as a massive surprise to this Fool.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.