Motorola cell unit hits operating profit

NEW YORK, USA: Motorola Inc's mobile devices business posted an operating profit for the first time in over three years on better-than-expected sales of smartphones based on Google Inc's Android mobile software, sending shares up 2.3 percent.

The company, which plans to split itself in two early next year, said its phone unit posted a $3 million operating profit compared with an operating loss of $183 million a year earlier.

While the unit still posted a net loss, analysts were impressed that the operating profit came a quarter earlier than the company had promised.

Avian Securities analyst Matthew Thornton said the early profit was likely driven by the popularity of Motorola's Android phones in China and in the United States where Verizon Wireless, the top U.S. mobile operator, heavily promotes Motorola Droid phones.

Some investors have been worrying about the prospect for Motorola's sales at Verizon Wireless once the operator starts selling the Apple Inc iPhone - widely expected to happen in the first quarter of 2011.

Motorola shipped 9.1 million phones in the quarter including 3.8 million smartphones. The average expectation was for 3.57 million smartphones, according to six analysts contacted by Reuters.

Motorola's total third-quarter profit rose to $109 million, or 5 cents per share, from $12 million, or 1 cent per share, a year earlier.

On an adjusted basis, its earnings per share was 17 cents compared with the average analyst expectation for 11 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 6 percent to $5.8 billion from $5.4 billion in the year-earlier quarter. The latest quarter includes $871 million of sales from the network equipment unit which Motorola is selling.

Motorola expects fourth-quarter earnings per share from continuing operations of 14 cents to 16 cents. The forecast excludes items such as earnings from the networking business, which it is selling to Nokia Siemens Networks.

Motorola shares were up 19 cents, or 2.3 percent, at $8.28 in premarket trade.