Updated from April 20

Judging by Tuesday's action, Motorola ( MOT) chief Ed Zander already may have earned his lavish pay package.

The onetime Sun Microsystems ( SUNW) executive raised some eyebrows last month with the disclosure that he'd earn up to $24 million in his new post. But the naysayers were nowhere to be found after a mind-bogglingly good quarter -- the first full period with Zander at the helm -- ignited a rally that added nearly $10 billion to Motorola's market capitalization.

Motorola shares continued rising Wednesday morning, recently up $3.04, or 18%, to $19.26.

Now the Schaumburg, Ill., tech titan -- long the butt of jokes among investors for its many pratfalls -- is reborn as a high achiever, courtesy of some missteps by handset rival Nokia ( NOK) and some stoked-up demand in the chips business.

"It's stunning," said Sanford Bernstein analyst Paul Sagawa, who rates Motorola stock sell. "Every business beat by a lot -- not just handsets. Shows you just how quickly market share can shift around based on new product deliveries in this market."

"The bar just got set higher," said Zander, on a postclose conference call with analysts. Motorola shares surged 20% after the impressive first-quarter beat and improving second-quarter guidance.

Beating by a Buck

For its first quarter ended in March, the wireless giant reported earnings of $609 million, or 25 cents a share, on revenue of $8.6 billion. That's well ahead of the year-ago profit of $169 million, or 7 cents a share, on sales of $6 billion.

The latest-quarter profit included about 7 cents of income from gains. On an operating basis, Motorola earned 18 cents a share in the period, which is miles ahead of the 7-cent Wall Street consensus as posted by Thomson First Call.

The news only got better for investors, as Motorola followed news of the blowout first quarter with a substantial bump in second-quarter earnings guidance. The company said strong performances at its handset and soon-to-be-separated semiconductors units led the advance.

Finance chief Dave Devonshire, summarizing the company's financial turnaround, pointed out that Motorola is now "net cash positive for the first time in 35 years." That's to say the company's cash position is at last larger than its debt obligations.

In handsets, the average selling price rose 12% sequentially, showing that the company is selling more expensive phones.

Picture This

Indeed, Motorola and Korean rival Samsung both cashed in this quarter on midprice camera phones. That's a model consumers were clamoring for but one that sector leader Nokia failed to produce. The camera-phone slip-up at Nokia has pared a third of its shares' value this month, following a pair of earnings warnings.

By contrast, Motorola said personal communications segment sales surged 67% from a year ago, to $4.1 billion. Operating earnings more than tripled to $398 million.

During the quarter, Motorola shipped 25.3 million handsets, up 51% from the year-ago quarter, and improved its market share, particularly in Europe. The segment also announced 25 new handsets, 24 featuring color displays and 16 featuring integrated cameras.

That said, industry analysts note that Nokia has all but declared a price war to regain its sliding market share. But Motorola executives on the conference call pointed out that more than two of every three phones sold in the latest quarter were color camera models, an area where Nokia was weak.

Asked if they were vulnerable to a Nokia price war, the executives said their sales "guidance speaks for itself. It's a market that's looking at functionality" in cellphones.

The company bounced back on the handset front after shipping delays and supplier shortages sabotaged Motorola's color camera phone sales last winter.

Motorola also boosted second-quarter earnings guidance, saying the company would make around 16 cents a share on some $8.4 billion in revenue. Analysts had forecast earnings of 9 cents on revenue of $6.9 billion.

Notably, Motorola announced in December that it would spin off its chip business, which is to be called Freescale Semiconductor.

On Tuesday, Motorola slipped 50 cents to $16.20.