Motorola (MOT) cried uncle. The struggling cell phone maker said after trading closed Thursday that it might have to separate its money-losing mobile devices business from the profitable networks businesses - just as activist investor Carl Icahn has been demanding. The move comes just a week after the company said the handset unit “remains challenged,” to the tune of a 38% drop in fourth-quarter sales. “The recovery in Mobile Devices will take longer than expected and there is a lot more work to be done,” new CEO Greg Brown said back on Jan. 23. Now, it seems that some of the work involves shopping the unit for a sale or perhaps trying to arrange a possible spinoff. Beyond the typical corporatespeak, Motorola remains vague about what exactly might be done, or why. “The company’s alternatives may include the separation of Mobile Devices from its other businesses,” Motorola said, “in order to permit each business to grow and better serve its customers.” Of course, the customer - as former chief Ed Zander learned the hard way - is always right.

Google (GOOG) sank in late trading after the Net search giant became the latest tech titan to disappoint Wall Street with its fourth-quarter profit report. Google made $4.43 a share for the quarter ended Dec. 31, on a so-called non-GAAP basis. That compares with the analyst consensus estimate of $4.45 a share. Net revenue, excluding the money Google shares with advertising partners, was $3.39 billion - just shy of the $3.45 billion analyst estimate. Shares fell $48 to $516.20 - taking Google shares down to a level not seen since last September.

“We’re very pleased with our performance this quarter,” said CEO Eric Schmidt. “It reflects strong momentum in our core business, growing receptivity to our new business initiatives, and improved discipline in managing our operating expenses.” 

Earlier, Fortune’s John Fortt mused on what might happen if Google missed its estimates. He noted that despite the company’s gains at the expense of rivals such as Yahoo (YHOO), a slowing economy isn’t likely to help the company meet Wall Street’s substantial expectations. So far, reassurance for tech investors doesn’t seem to be at hand.

Not everyone is overjoyed with Bank of America’s (BAC) deal to buy Countrywide (CFC). Hedge fund SRM, which has taken a 5.2% stake in Countrywide, said in a regulatory filing Thursday that it is “of the view that the merger agreement does not provide sufficient value to holders” of Countrywide shares. The news comes as shares in Countrywide, which have dropped 86% over the last year amid a steep decline in the housing market, continue to trade sharply below the indicated value of the merger. Even so, there’s a substantial body of thought to the effect that if Bank of America hadn’t come to Countrywide’s rescue three weeks ago, Countrywide shareholders would now find themselves holding stock that is essentially worthless, given the company’s repeated brushes with bankruptcy. SRM, which has been buying and selling shares over the past two months at prices between $5.20 and  $9.12 a share, obviously doesn’t subscribe to that view. It says in the filing that it “may initiate discussions with [Countrywide] and may communicate with the [Countrywide's] executive management and board of directors, with other holders of the issuer’s common stock, and with B of A from time to time regarding the proposed terms of the merger agreement.” Good luck with that.

Forget Starbucks (SBUX). Caffeine-seeking investors will soon have a new coffee stock at their disposal - Folgers. Parent Procter & Gamble (PG) said Thursday it will separate its Folgers unit in a spinoff or split-off transaction later this year. Folgers - which made $350 million in operating income last year on sales of $1.6 billion - employs 1,250 workers and will be headquartered along with P&G in Cincinnati. Folgers has been part of Procter & Gamble for 45 years, but the parent believes it’s time to turn the java unit loose. Purely by coincidence, the decision comes as a looming recession threatens to weigh down consumer spending and big chains like Starbucks cool their growth plans.

“P&G believes the transaction will be good for the coffee business as the business will get greater priority and attention as a standalone company,” the maker of Tide and Crest said in a press release. “This separation allows us to focus on our core businesses and The Folgers Coffee Company to further develop and leverage its brand portfolio in a coffee-specific business model.” Plus, Wall Street will get a chance to decide whether the best part of waking up is Folgers in its cup.

A day after its shares plunged 11% in postclose trading following a disappointing earnings forecast, Amazon.com (AMZN) is calling an audible. The online retail giant agreed Thursday to pay $300 million to buy Audible.com (ADBL), a Newark, N.J.-based maker of audio books. The all-cash deal will give Audible shareholders $11.50 a share, a 23% premium to Wednesday’s closing price. “Working together,” Amazon said in its press release, “we can introduce more innovations and bring this format to an even wider audience.” The Audible deal will help Amazon add to its ever-expanding offerings of books, gadgets and everything else under the sun, which is surely good for the company’s many customers. Still,  Thursday’s stock market action is likely to suggest that Wall Street remains more concerned about the cost of shipping stuff for free to those customers - and the company’s narrowing profit margins.

Bond insurer MBIA (MBI) posted a steep fourth-quarter loss that will only intensify questions about its chances of fending off a ratings agency downgrade. The Armonk, N.Y., company lost $2.3 billion, or $18.61 a share, for the quarter ended Dec. 31, reversing the year-ago profit of $181 million, or $1.32 a share. MBIA did say it closed a $500 million stock sale to private equity firm Warburg Pincus, and that it is considering its alternatives for raising additional equity, including a $500 million rights offering Warburg has agreed to backstop. Given rising losses tied to the crumbling value of mortgage-related securities, it’s likely the company will have to raise more money soon to hold onto its triple-A ratings from Moody’s and S&P. Complicating those efforts, though, is a push by hedge fund investor Bill Ackman, who is short MBIA, to raise questions about the accounting practices and financial prospects of MBIA and rival Ambac (ABK). Elsewhere, S&P is forecasting banking industry losses of $265 billion on mortgage securities and collateralized debt obligations - very much the sorts of holdings that have investors worried about Ambac and MBIA. Those sorts of observations are part of what pushed both stocks to double-digit percentage losses Wednesday - and why Thursday may well bring more of the same.

Wednesday was a red letter day for Fannie Mae (FNM) chief Daniel Mudd, if not for the mortgage company’s beleaguered shareholders. Fannie shares fell 6% in trading Wednesday, and that was before Fannie put out a press release announcing Mudd’s 2007 pay. He made $990,000 last year in salary and took in a “performance bonus” of $2.2 million,  along with a $9 million long-term incentive grant. Altogether Mudd pulled down $12.2 million, Fannie said - this in a year in which the company’s stock dropped 30%. That sounds like a nice deal for Mudd, though Fannie might point out that his pay actually dropped by $2.2 million from 2006 levels. That means his compensation took a smaller hit last year than did Fannie shareholders, but you can’t have everything. At least he didn’t get a big raise.

Ann Taylor (ANN) became the latest retailer to cut back its growth plans amid signs that the economy is slowing. The New York-based fashion retailer said it will close 117 stores over three years and cut 180 headquarters jobs in a strategic restructuring aimed at helping the company return to a growth track. Ann Taylor said it will open fewer Ann Taylor and Ann Taylor Loft stores this year and delay rolling out its unnamed new retail concept, which had been set to open this fall, till next year.

Aside from charges tied to the firings and store closings, Ann Taylor said it remains comfortable with its fiscal 2007 earnings estimates. “In all, the plans we are pursuing are designed to enable us to weather the expected downturn in 2008,” said CEO Kay Krill, “while positioning the company for aggressively pursuing growth as the economy recovers.” That’s corporate-speak for battening down the hatches.

Shares of bond insurers Ambac (ABK) and MBIA (MBI) sank in afternoon trading Wednesday after CNBC reported short-seller Bill Ackman of Pershing Square may soon issue another report questioning the companies’ prospects. The news comes as regulators led by New York insurance superintendent Eric Dinallo are trying to put together a plan to recapitalize the bond insurers. The regulators hope to fend off a ratings downgrade that could lead to another round of costly writedowns at big banks. But skepticism about the bailout plan has been rising, as analysts and investors increasingly doubt whether a downgrade can be avoided - and whether the insurers can survive hefty losses on mortgage-related securities. The plunge in the value of the bond insurers’ shares has made vulture investors leery of jumping in, though steel magnate Wilbur Ross is reportedly kicking the tires at Ambac. That news recently got Fortune’s Roddy Boyd wondering what Ross could possibly be thinking - though in fairness, that’s a question that might be asked of just about every financial industry executive about now.

The latest earnings report from Swiss banking giant UBS (UBS) shows the pain of the U.S. housing bust is far from over. UBS said Wednesday morning its fourth-quarter financial report will include a $14 billion writedown tied to the plunging value of the firm’s holdings of mortgage-related securities. UBS said $12 billion of the writedown comes “on positions related to the U.S. sub-prime mortgage market,” and the rest on other positions related to U.S. residential mortgages. Last month, UBS projected its fourth-quarter writedown would be $10 billion. In adding to its losses on U.S. housing bets, UBS joins Citi (C) and Merrill Lynch (MER), both of which posted bigger-than-expected fourth-quarter losses earlier this month.

Adding to the gloom over the banking sector, Oppenheimer analyst Meredith Whitney says UBS, Citi and Merrill could be in for billions of dollars of additional writedowns this year tied to problems at the bond insurers Ambac (ABK) and MBIA (MBI). Whitney says she doesn’t believe a bailout of the insurers is likely to come to pass, which could lead to some $40 billion in 2008 writedowns at big banks - the majority of which would be taken at Citi, Merrill and UBS.

 ”While we had previously believed the monoline insurers MBI and ABK were too important to fail due to the threat of systemic risk and thus would likely be bailed out,” she writes in a report Wednesday, “we no longer think systemic risk is even realistic or a bailout of the monolines even viable.” Additional writedowns could bring the big banks back to the trough for more capital, even after a two-month span that has seen the Merrill-Citi-UBS trio dilute shareholders by raising tens of billions of dollars. No wonder financial stocks were selling off Wednesday morning - even as rate-cut relief looms this afternoon.