"Actually, it would be surprising to me if Motorola did not bring down expectations again," said Mark Roberts, an analyst at First Union Securities in San Francisco, who has a "neutral" rating on the stock.
Some equipment makers are also being hurt by investments they made in phone companies' networks -- and the companies themselves -- to win orders.
Lucent Technologies Inc, the biggest creditor of One.Tel Ltd, will struggle to recoup US$312 million from the failed Australian phone company because the value of its main assets, wireless licenses, have tumbled, analysts said.
"The equipment makers are at the end of the food chain, and they're caught between a rock and a hard place," said John Edwards, who heads the telecom media networks unit of Cap Gemini Ernst & Young in Singapore. "The level of vendor financing for Lucent and Nortel was huge, so there was enormous exposure."
Demand for telecommunications gear hasn't improved in the second quarter, forcing Lucent, Nortel and rival suppliers to reduce costs as phone companies cancel orders, analysts said.
Nortel plans to cut 30,000 jobs by September.
"It's going to look really bad this quarter," said Ken Turek, senior portfolio manager at Northern Trust Corp in Chicago, who holds shares of Cisco Systems Inc and Ciena Corp.
"A year ago at this point, I'd say it was getting shaky -- now, we're in never-never land."
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