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Ongoing legal battles over patents and tough competition are hurting Motorola’s sales and profits, the company said on Friday.

After the market closed on Friday, the company reported that sales fell short of expectations in the fourth quarter of 2011. The company estimates sales of about US$3.4 billion for the quarter, with modest profitability on a non-GAAP basis. Analysts had expected the company to bring in sales of US$3.9 billion, according to Reuters.

Motorola blamed increased competition in the mobile-device market, as well as raging patent wars, primarily with Apple. The company also said it shipped about 10.5 million mobile devices in the quarter, of which about 5.3 million were smartphones.

Motorola will offer more detail about the quarter when it releases its full earnings report on 26 January.

Motorola, which uses the Google Android operating system for its smartphones, sued Apple in October 2010, accusing it of violating 18 separate patents by including Motorola technology in its iPad, iPhone, iPod Touch and certain Mac computers. Apple fired back almost immediately with two lawsuits of its own against Motorola. Apple said that Motorola is violating its patents for multi-touch by including the feature in several of its Droid smartphones and other handsets.

The two companies have been going back and forth in the US courts, as well as in courts outside of the US, over intellectual property issues.

Motorola, which has been around for more than 80 years, has a strong patent portfolio, and it’s believed that the patent portfolio alone could have been what sparked Google’s interest in acquiring Motorola. Google announced in August that it plans to buy Motorola for US$12.5 billion. The deal is still awaiting regulatory approval. Motorola has a portfolio of more than 17,000 approved patents, with another 7500 patents filed and pending approval.

Despite the fact that Motorola has an enviable patent portfolio, defending those patents has not been cheap. And it looks like the cost of its legal wrangling is taking a toll on the company.

Meanwhile, Motorola is facing stiff competition from other smartphone competitors, such as Samsung and LG. According to market-research firm ComScore, Samsung accounted for 25.6 per cent of US mobile subscribers for the three months ending 11 November, a slight increase of 0.3 per cent over the previous three months. Motorola accounted for about 13.7 per cent, which is slightly down from 14 per cent for the three months that ended in August.

Via CNET