Motorola ( MOT) said third-quarter earnings dropped 94% from a year ago, but shares rose in early action Thursday after the handset maker guided above the Wall Street consensus for its fourth quarter.

The Schaumburg, Ill., tech shop made $40 million, or 2 cents a share, from continuing operations for the quarter ended Sept. 29, down from the year-ago $727 million, or 30 cents a share. Excluding restructuring charges, earnings were 4 cents a share, matching the Thomson Financial analyst consensus estimate.

Worst May Be Over for Motorola

Sales fell 17% from a year ago to $8.81 billion, matching the analyst expectation.

"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," said CEO Ed Zander. "We have strengthened our leadership position in broadband video, WiMAX, next generation government and public safety and the enterprise mobility markets. With our focus on these key opportunities and the initiatives we are taking in mobile devices we will further improve our performance and create long-term shareholder value."

The mobile device segment posted an operating loss of $138 million, reversing the year-ago operating profit of $843 million. Sales in the segment plunged 36% from a year ago to $4.5 billion. The company shipped 37.2 million handsets, including 900,000 of its new Razr2 device.

The results show that Motorola has yet to turn the corner in its effort to regain momentum against rivals such as Nokia ( NOK), Samsung and Sony Ericsson.

The company said it expects to make 12 to 14 cents a share in the fourth quarter, beating the dime-a-share Wall Street estimate.

Shares rose 45 cents to $19.