Updated from Jan. 20

Motorola

(MOT)

roared past estimates Tuesday, though it did little to bolster Wall Street's hopeful stance on the wireless industry.

The tech giant beat fourth-quarter estimates and forecast solid results for its seasonally weak first quarter. But Motorola's flagship handset business continued to struggle, while its strong performances came in areas that investors are less interested in.

Shares of Motorola and many other tech names slipped early Wednesday, as wireless chipmaker

RF Micro

(RFMD)

suggested that a potential

AT&T Wireless

(AWE)

-

Cingular

tie-up could soften demand in the current quarter. On Wednesday morning, Motorola dropped 15 cents to $16.90.

For its fourth quarter ended Dec. 31, Schaumburg, Ill.-based Motorola posted earnings of $489 million, or 20 cents a share, on sales of $8 billion. Excluding certain one-time items, so-called pro forma profits jumped to 17 cents a share in the latest period.

Analysts surveyed by Thomson First Call had expected earnings per share of 13 cents, flat with year-ago levels. Revenue was expected to be $7.7 billion, up from $7.5 billion in the corresponding quarter a year earlier. Gross margins improved 60 basis points sequentially, the company said on a postclose conference call with analysts and investors.

"These results provide further evidence that top-line growth has returned and that further improvement in profitability can be achieved," says Motorola CEO Ed Zander, who is expected to give an outlook for the business on a conference call later with analysts.

But not everyone was convinced.

While Motorola reported strength in its broadband, chips and two-way radio businesses, Wall Street was focused on a rather dismal performance on the cell-phone front. In what is typically its seasonally strongest quarter, Motorola reported only 12% sequential handset revenue growth on flat 5% margins.

By comparison, rival

Nokia's

(NOK) - Get Report

handset sales are expected to jump 25% in the fourth quarter from third-quarter levels. In addition, Nokia has managed to improve its margins by selling more high-end phones, says Sanford Bernstein analyst Paul Sagawa, who has a sell rating on Motorola and a buy on Nokia.

Flat margins indicate that Motorola may not have had strong demand or execution on sales of its higher-priced phones. Nokia's preliminary report last week indicated that the big Finn phone maker was having healthy success with sales of its more expensive models.

Tuesday's report comes at the end of an eventful quarter for Motorola, which late last year named Zander CEO following a series of high-profile missteps. The No. 2 handset maker was late to market with some of the lucrative camera phones that consumers were so keen on last Christmas.

On a conference call with analysts, Motorola executives acknowledged the company was late with more than three models. But COO Mike Zafirovski told analysts that those phones would be shipping in good volumes this quarter.

Zander, a former

Sun Microsystems

(SUNW) - Get Report

exec, has overseen a number of victories at Motorola in his brief tenure to date. The company set out a plan last month to spin off its semiconductor unit, a move many analysts see as a prelude to a larger restructuring. Also, last week Motorola signed up a big wireless supply deal in China.