Updated from July 20

Motorola ( MOT) swung to a loss in its latest quarter after a charge related to its chip-business spinoff.

But the company's shares rose 3% early Wednesday as investors were reassured by a strong revenue gain and a rise in top-line guidance. Motorola also said it would change leadership in its key wireless phone unit, after the unit posted a solid rise in handset sales.

For its second quarter ended June 30, the Schaumburg, Ill., tech shop posted a loss of $203 million, or 9 cents a share, on revenue of $8.7 billion. That reverses the year-ago gain-aided profit of $119 million, or a nickel a share. Year-ago sales were $6.16 billion.

Analysts surveyed by Thomson First Call had forecast an 18-cent-a-share operating profit on sales of $8.49 billion. The latest quarter, however, included a charge of $898 million, or 38 cents a share, related to establishing a deferred tax asset valuation reserve stemming from the initial public offering of the company's Freescale Semiconductor ( FSL) unit. The latest period also included various other charges and gains that appear to roughly offset one another.

"I think this was better than the Street had feared," said a hedge fund manager who has no position in the stock and asked not to be named.

Motorola boosted its third-quarter revenue guidance to around $8.6 billion from the previous $8.4 billion. The company said earnings would be 15 to 19 cents a share, which is toward the low end of Wall Street's estimate range.

Motorola rose 58 cents early Wednesday to $16.67.

Making Changes

The company said it generated $994 million of free cash flow in the latest period, putting its period-end cash position at $1.8 billion.

Motorola also said the head of its handset unit, Tom Lynch, would leave for personal reasons at the end of the summer. Lynch's departure comes as Motorola reported that it shipped 24.1 million handsets in the latest quarter. That's up 52% from a year ago but won't quiet speculation on Wall Street that the company risks losing ground to competitors.

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