Motorola's Shares Surge With Unexpected Profit

The turnaround effort long sought at Motorola Inc. finally could be on track.

In this photo made Sunday, Oct. 25, 2009, an Arizona Cardinals staff member holds a pair of...

In this photo made Sunday, Oct. 25, 2009, an Arizona Cardinals staff member holds a pair of headphones made by Motorola during the first quarter of an NFL football game between the New York Giants and the Arizona Cardinals in East Rutherford, N.J. Motorola Inc. reported an unexpected quarterly profit Thursday, Oct. 29, 2009, as operating losses in its struggling mobile phone division narrowed. (AP Photo/Mel Evans)

(AP)

The maker of communications equipment reported an unexpected quarterly profit Thursday as losses in its mobile phone division narrowed. The company also forecast stronger-than-anticipated earnings for last three months of the year, sending its shares up 11 percent.

Though sales continued to fall, the results marked Motorola's second straight quarterly profit after heavy losses and shrinking market share in the cell phone business. Aggressive cost cutting, including 8,000 layoffs this year, have helped bolster earnings.

Co-CEO Sanjay Jha, hired last year from Qualcomm Inc. to help reverse Motorola's slide, is banking on new phones that run by Google Inc.'s Android operating system. Two of the phones — including a device called the Droid introduced Wednesday by Verizon Wireless — will be available as the holiday shopping season arrives.

Coinciding with the release, Motorola offered an upbeat forecast for the holiday quarter. It expects adjusted earnings of 7 cents to 9 cents per share, while analysts polled by Thomson Reuters had been expecting 6 cents.

In the three-month period that ended Oct. 3, Motorola earned $12 million, or a penny per share. That compares with a loss of $397 million, or 18 cents per share, in the same quarter a year ago.

Excluding unusual items, Motorola says its earnings came to 2 cents per share. Analysts had expected a break-even quarter, according to a Thomson Reuters poll.

Investors sent Motorola's shares up 91 cents to $8.87 in midday trading.

But Motorola still has plenty of work ahead.

Jha has been moving to cut unprofitable product lines. He has refocused the company on trying to tap the quickly expanding market for mobile gadgets that offer advanced features such as e-mail and Web browsing.

With the Droid and another phone called the Cliq, offered by T-Mobile, Jha has followed through on his pledge to get two "smart" phones to market by the holidays. But it remains to seen how they can stand up to Apple's hugely popular iPhone and other devices.