Motorola, the biggest mobile phone maker in the United States, returned to profit in the second quarter, selling more handsets than expected and narrowly retaining its place as the world's third-ranked mobile maker, ahead of LG Electronics.

Having notched up losses of $1.6 billion (£800 million) since the beginning of 2007, Motorola shares bounced 10 per cent to $8.50 in early Wall Street trading after revealing it expects to report a full-year profit. The shares had slumped more than 70 per cent since October 2006.

In the three months to June 30, Illinois-based Motorola said it had shipped 28.1 million phones, about 1.4 million more than analysts had forecast.

The strong sales performance paved the way to a second-quarter profit of $4 million compared with a $28 million loss in the same period in 2007. The result was a $198 million turnaround on the first quarter.

On a per-share basis Motorola broke even. Next quarter it expects to deliver earnings per share of 2 cents and full-year earnings per share of between 6 and 8 cents.

The company, which has been losing market share to Finland’s Nokia and South Korea’s Samsung, said revenue fell to $8.1 billion from $8.7 billion a year ago.

Slumping phone sales have prompted Motorola to cut more than 9,000 jobs since the start of last year. In the first quarter, sales fell 39 per cent, leading to a $194 million loss.

The mobile phone sector has been under pressure this year as consumers become less willing to spend on new models in an economic downturn.

Sony Ericsson last week cautioned that it would fail to meet its financial targets in the quarter, while Samsung shares took a battering on lower-than-expected second-quarter profits.

Nokia, the world's biggest mobile maker, cut the prices of many of its phones by up to 10 per cent this month, it was reported today.

Motorola's main division — mobile devices — recorded sales of $3.3 billion, down 22 per cent compared with the previous corresponding quarter. The segment reported an operating loss of $346 million.

The home and networks mobility division, which supplies home entertainment and content, recorded sales of $2.7 billion, up 7 per cent. Operating earnings were $245 million, up 28 per cent.

Motorola chief executive Greg Brown said the company launched ten new phones in the quarter.

"We also made progress on our plans to separate Motorola into two independent, publicly traded companies, generated positive operating cashflow and reduced our cost structure,” he said.

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