This is why they’re splitting off the devices business: Motorola (NYSE: MOT) has announced a Q1 loss of $194 million ($.09 per share) compared to a loss of $181 million ($.09 per share) in the year-ago period. Slumping handset sales destroyed the top line. Revenues were down over 21 percent to $7.44 billion from $9.43 billion, as handset sales dropped 39 percent to $3.3 billion. Analysts had been looking for revenue of $7.75 billion. The unit had an operating loss of $418 million, compared to a loss of $233 billion a year ago.

SEE ALSO: Earnings: Motorola Handset Sales Down A Third In 2007, No Short Term Fix

Comparatively, networking equipment performed better, but not stellar, as revenues grew 2 percent to $2.4 billion. Operating earnings fell to $153 million form $167 million. Enterprise mobility revenue grew 5 percent to $1.8 billion. CNN reports that Motorola’s share of the global handset market fell to 9.5 percent in Q1, a sad day for company once gunning for Nokia’s (NYSE: NOK) top spot.

Release | Webcast (8:00 AM ET)

Conference call: Is this as bad as it gets for Motorola’s troubled handset division? Management won’t say so definitively, but they strongly hinted that it doesn’t get much worse from here. CEO Greg Brown predicted that Q2 handset revenue will come in slightly ahead of Q1, so perhaps the tourniquet has been applied. The big problem: the product portfolio. Some areas where they hope to get more competitive include touch-based phones (of course) and phones specifically geared towards messaging, not to mention a portfolio better geared towards 3G. In terms of numbers, said Brown: “We introduced six new products in Q1… we expect more products in Q2.” The challenge will be turning more into better.

—Handset leadership search: Brown: “it’s progressing well.” So that can mean anything.