Motorola Inc., the world's biggest mobile-phone maker 10 years ago, probably fell to fourth last quarter as it lost more market share to LG Electronics Inc.

Motorola tomorrow may say sales fell 26 percent to 26.1 million phones in the period, according to the average estimate of six analysts surveyed by Bloomberg. Nokia Oyj and Samsung Electronics Co. already have passed Motorola, and LG last week said shipments rose 45 percent to 27.7 million in the quarter.

Motorola's slide to No. 4 comes as much as six months sooner than analysts predicted, and calls into question the viability of Chief Executive Officer Greg Brown's plan to split off the money- losing phone unit. Motorola has yet to unveil a touch-screen phone in the U.S. to compete with LG's Voyager or Apple Inc.'s iPhone.

``I expected Samsung to pass them, but I didn't think LG would pass them as well,'' said Pablo Perez-Fernandez, an analyst at Global Crown Capital LLC in San Francisco. ``The decline was much worse than I thought.''

Perez-Fernandez, who rates the shares ``neutral,'' puts Motorola's market share at 8.5 percent and LG's at 9.1 percent. Two years ago, Motorola had about 22 percent. Researchers at Strategy Analytics in Boston had projected in May that Motorola would fall behind LG by the end of the year.

Motorola, based in Schaumburg, Illinois, may also report that its net loss widened in the quarter to $76.1 million, or 4 cents a share, from $28 million, or 1 cent, a year earlier, according to a Bloomberg survey of 15 analysts. They estimate sales slid 11 percent to $7.7 billion, the sixth quarterly drop in a row.

The company is scheduled to report its earnings before U.S. exchanges open tomorrow.

More Losses

Motorola, No. 2 as recently as last year, may see further declines in its ranking. No. 5 Sony Ericsson Mobile Communications Ltd. in London is closing in, having shipped 24.4 million units last quarter. Second-ranked Samsung, based in Suwon, South Korea, moved 45.7 million, and industry leader Nokia, based in Espoo, Finland, shipped 122 million.

``We've seen more share loss and shelf space loss for Motorola,'' said Michael Walkley, an analyst at Piper Jaffray & Co. in Minneapolis with a ``sell'' rating for the stock. ``They're closer to being No. 5 than No. 2.''

Motorola rose 43 cents to $7.51 yesterday on the New York Stock Exchange and has lost 53 percent this year. Five analysts recommend selling the stock, eight say buy and 19 advise holding it, according to data compiled by Bloomberg. Seoul-based LG has advanced 1.5 percent this year on the Korea Exchange.

Split Looms

Brown, 47, said in March he will shed the phone unit to focus on profitable set-top boxes, radios and networking gear. Motorola hasn't had a hit handset since the Razr flip-phone in 2004, and the mobile business has lost more than $1.6 billion since the start of 2007, prompting more than 9,000 job cuts.

The company is making progress with the plan to break off the phone division, Motorola spokeswoman Jennifer Erickson said. This week, Motorola said it will divide its set-top box and networks division into three businesses. Erickson declined to comment on earnings or market share.

Motorola won't be able to split off the phone unit until it's profitable, said Raimundo Archibold, an analyst at Kaufman Brothers LP in New York. That won't happen until some time next year, he said.

`Mended'

``You'd need to have the business in the state of being mended,'' Archibold said. Otherwise, Motorola would need to spend some of its cash to keep the handset unit afloat, hurting the ``healthier'' divisions, he said. The company had $2.69 billion in cash and cash equivalents on March 29.

If the handset unit hasn't returned to profit a year from now, Motorola will have to consider cutting its losses and closing the business, Archibold said. He recommends buying the stock, saying it's worth $10 without the phone division. He owns the shares.

To turn a profit, Motorola must improve its phones, Archibold said. The latest models, including the Rokr E8 music phone and the Z9 with satellite navigation, are inferior to competing handsets in the same price range, he said. The phones cost $199.99 with a contract, the same as Cupertino, California- based Apple's iPhone.

Apple started selling the iPhone in June 2007 and broke into the list of world's 10 biggest handset makers later that year. A version that debuted this month sold 1 million units in the first three days, leaving most Apple stores out of stock after 10 days.

LG's Vu and Voyager, offered in the U.S. by AT&T Inc. and Verizon Wireless, have touch screens and can play video, emulating the iPhone. Samsung's touch-screen Instinct had the best first week of any new handset Sprint Nextel Corp. has sold, the carrier said last month.

``They've been more willing to take risks with hardware design, LG especially with touch screens,'' said Morgan Keegan & Co. analyst Tavis McCourt in Nashville, Tennessee. ``They both have just many, many more phones than Motorola has.''

Source:Bloomberg