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Motorola Beat The Street, Exits Red Ink

-- Updated with Motorola CEO comments on the earnings call

NEW YORK, ( TheStreet) -- Motorola's (MOT) mobility business swung to a profit in the third quarter after three years in the red on strong Android phone sales.

The Schaumburg, Ill. wireless titan posted adjusted earnings including proceeds from discontinued businesses of 16 cents a share Thursday, up from the two cent profit in the year-ago period and well above the 11 cent target analysts had for the bottom line.


Third quarter sales were $5.8 billion, up 6% from year-ago levels and above the $5.66 billion analysts were looking for.

Motorola sold 9.1 million phones and included in that were 3.8 million smartphones, slightly more than analysts were expecting.

The strong performance helped ease concerns that Motorola's turnaround bid was already facing challenges in a competitive market.

Motorola shares have fallen 6% in the past month as investors started to worry that Motorola's three-way partnership with Google's (GOOG) Android, and the Verizon (VZ - Get Report) Droid campaign has lost some luster ahead of the Apple (AAPL - Get Report) iPhone arrival at Verizon in January.

The average selling price or ASP rose to $223 from $207 as smartphones grew as a portion of total sales.

On an earnings call with analysts, phone chief Sanjay Jha said he expected sales and the total number of phones to grow sequentially over third quarter levels. The increase will be driven by a push into so-called midrange devices, says Jha. Earnings in the fourth quarter will be higher, but offset to some degree by higher costs of new product launches, Jha says.

Asked about the continued commitment of Verizon to the Droid effort given the expected arrival of the iPhone at Verizon, Jha said Verizon and Motorola will "continue to invest in the Droid franchise."

Additionally, said Jha, Motorola is planning to "diversify with other operators." Analysts expect Motorola to push a number of mid-priced Android phones at AT&T later this year and next.

Motorola shares were up 6% to $8.60 in premarket trading Thursday.

--Written by Scott Moritz in New York.

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