Motorola announced continued losses for its handset unit today, sending its shares down by as much as 16% in morning trading. The U.S. handset manufacturer said it expects to post an operating loss for the current quarter due to a slower than expected recovery in its handset business. The announcement overshadowed the company’s Q4 results, which, while not positive, were in line with expectations.

For Q4, Motorola posted an operating loss of $388 million, compared with a profit of $341 million for the same quarter a year earlier. Sales of mobile phones fell 38% to $4.8 billion, with 40.9 million units sold.

Motorola’s new CEO Greg Brown admitted the company’s previous strategy to return the handset business to profitability was not working. “We are focused on aggressively rationalizing the company’s cost structure and working to get Mobile Devices back on track,” Brown said, via a statement. “The recovery in Mobile Devices will take longer than expected and there is a lot more work to be done.”

For the current quarter, the company forecast continuing operating losses per share of 5 to 7 cents, before any reorganization charges, while analysts had expected a profit of as much as 10 cents per share for the first quarter of 2008.

In more bad news for Motorola, the UK’s Financial Services Authority (FSA) has launched an investigation of insider trading regarding the company’s purchase of TTP Communications in 2006. The FSA accused Christopher McQuoid and James Melbourne, former general counsel for TTP Communications, of having knowledge of Motorola’s plans to purchase the company, when the two purchased more than 153,000 shares in the company. Both pleaded not guilty.