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 Motorola posted profit of $60 million, or 3 cents per share, compared with a year-earlier profit of $968 million, or 39 cents per share. On a continuing operations basis, the company said it earned 2 cents per share, including 4 cents per share in charges for layoffs and asset write-downs.
Sales fell to $8.81 billion from $10.6 billion a year earlier.
Analysts polled by Thomson Financial on average expected profit of 4 cents per share, excluding items, on sales of $8.81 billion.
Motorola said sales in its mobile devices segment fell 36 percent. The company has struggled to produce popular handsets of late. It said its new Razr 2 phone shipped 900,000 units in the quarter.
Results from the quarter were being closely watched as a gauge of Motorola's progress in turning around its troubled cell-phone business. They also could determine whether embattled Chief Executive Ed Zander has a chance to stay in the job amid investor calls to oust him because of the company's slump.
It did manage to beat Wall Street's expectations for handset shipments in the quarter, shipping a total of 37.2 million.
Company executives also said strategic changes were helping to improve its operating cash flow and forecast a bigger operating profit for the fourth quarter than had been anticipated.
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 The Schaumburg.-based company said it now expects fourth-quarter earnings from continuing operations of 12 cents to 14 cents per share, excluding one-time items. Analysts had estimated earnings of 10 cents per share.
"We are pleased with the improvement in the financial performance of mobile devices and we look forward to building upon the progress we have made," Zander said in a statement.
Motorola's two-year run of success from the trend-setting Razr phone started crumbling about a year ago when sales eased off and the company acknowledged it had been increasing world market share by cutting prices aggressively, hurting profit margins.
It has since slipped to third place behind Samsung Electronics Corp. and remains far behind leader Nokia Corp. amid the inability to find a hot-selling successor to the Razr.
For the first nine months, Motorola had a loss of $149 million, or 6 cents per share, compared with net income a year earlier of $3 billion, or $1.24 per share. Revenue sank 13 percent to $30 billion from $31 billion.
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On the Net:
Motorola: http://www.motorola.com/
[Associated Press]
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