Motorola Inc. (MOT) Tuesday said its second-quarter profit rose from a year ago and revenue increased 17 percent, boosted by strong growth in its mobile telephone business.

But its shares, which had risen about 35 percent in the last three months, fell about 3 percent in after-market trade as some investors had hoped for a bigger profit hike.

"It was a very strong quarter in handsets, but most of the profit upside was on one time gains," said Charter Equity analyst Ed Snyder. "The street was probably looking for more upside than they had published." record handset shipments arising from strong demand in the United States and emerging markets.

It reported a profit from continuing operations of $947 million, or 38 cents a share, compared with a profit of $619 million, or 25 cents per share a year ago. The results exclude its chip business, which was spun off in December.

Excluding one time gains of 12 cents a share in the current quarter, its earnings were a penny higher than average Wall St. estimates of 25 cents a share, according to Reuters Estimates.

Motorola, which trails only Nokia in the global handset market, posted revenue of $8.83 billion compared with $7.54 billion a year earlier.

Analysts on average were expecting revenue of $8.5 billion, according to Reuters Estimates.

Motorola said it shipped 33.9 million mobile phone units in the quarter and gained 3.3 percentage points in the global mobile handset market compared with a year ago, giving it a market share of 18.1 percent.

"We went into the quarter feeling very good. Our product line was stronger and perhaps our competition was weakening," Chief Executive Ed Zander (search) said in an interview.

Smaller rivals Samsung Electronics (search) and LG Electronics (search) have said in the last few days that their margins had come under pressure in the second quarter as marketing costs rose amid cut-throat competition.

Samsung had said its handset sales were similar to the first quarter and LG said sold fewer handsets than it expected in the quarter.

Motorola said it expects third quarter earnings of 27 cents to 29 cents per share on revenue ranging between $8.9 billion and $9.1 billion.

Its shares traded down 60 cents at $19.25 on Inet down from their regular New York Stock Exchange close of $19.85