Motorola's

(MOT)

resurgence as a wireless powerhouse took a step backward last quarter.

Handset rival

Samsung

edged out Motorola for the No. 2 slot in cell-phone sales for the quarter ended Sept. 30, according to a Gartner Group report Wednesday. The move pushes Motorola out of its accustomed runner-up spot behind

Nokia

(NOK) - Get Report

.

Samsung, a Korean electronics giant, shipped 22.98 million phones in the third quarter. That compares with 22.39 million units sold by Motorola and 51.69 million phones sold by Nokia.

The report shows that while Nokia recovered some of the business it lost earlier this year due to a weak phone lineup, Motorola's grip on the market continued to slip.

Motorola sank to third place in the third quarter just as chief Ed Zander has been trying to marshal a strategy to renew the company's focus on mobile communications. Zander was brought in early this year to replace the previous leadership team, which had posted an

impressive record of blunders.

Though symbolically the latest quarter's drop in stature is big, Motorola's decline doesn't come as a complete surprise. Back in July, some analysts had predicted that

Motorola could slip to No. 3 as Korean challengers like Samsung and

LG

rode early success in delivering attractive features such as cameras and bright color screens loaded into compact, clam-shaped phones.

In October, Motorola

disappointed investors, posting a sequential quarterly decline in phone sales.

Last month, speaking at an investor conference in New York, Zander tried to downplay slipping sales rankings. "Market share isn't the name of the game," Zander told the lunchtime crowd. And to help take the focus off Motorola's sliding standings in the handset league, Zander played a couple of TV commercials for the company's new $600 "razr" phone hitting the market for the holiday buying season.

But it's too early to tell if the heavily marketed, metal-clad razr phone will give the company the edge on the likes of Samsung. Gartner analyst Ben Wood says Motorola is in a good position with phone selection and supply for the fourth quarter. Still, Samsung isn't exactly fading away.

"I think that Motorola will face extremely strong competition from Samsung throughout 2005," says Wood.