Motorola Earnings Slightly Below Expectations; Sales Strong

Motorola Inc. (MOT), the world's No. 2 maker of cell phones, on Tuesday said its quarterly profit more than tripled as sales rose 26 percent, but revenue came in slightly below Wall Street's average estimate and growth in handset volumes disappointed Wall Street.

Motorola said third-quarter sales rose 26 percent as shipments of handsets rose 15 percent to 23.3 million, including a host of new high-end models.

But total revenue was slightly below Wall Street expectations, and the company provided lackluster revenue guidance for the fourth quarter, which includes the key holiday selling season.

"I think the big question mark is going to be the handset business," said A.G. Edwards & Sons analyst Greg Teets. "What is going to be their strategy to build some momentum?"

Teets noted that No. 3 cell phone maker Samsung (search) is only about 500,000 units away from overtaking Motorola's No. 2 spot. Finland's Nokia (NOK) is the No. 1 cell phone makers.

Motorola's third-quarter profit rose to $479 million, or 20 cents a share, from $116 million, or 5 cents a share, in the year-earlier period.

Sales rose to $8.62 billion from $6.83 billion, below analysts' estimates of $8.67 billion on average, according to Reuters Estimates.

The company forecast fourth-quarter revenue between $9.3 billion and $9.6 billion, compared with Wall Street's consensus estimate for revenue of $9.52 billion.

In an interview, Chief Executive Ed Zander characterized the company's outlook as "pretty solid and optimistic."

"We have the best product line-up we've had in a long time," Zander said. "We think we had a great Q3 and we think Q4 is shaping up to be optimistic."

Shares of Motorola fell to $17.90 in after-market trading on INET from a close of $18.75 on the New York Stock Exchange (search).

Reuters contributed to this report.