(Updates with revised lede, analyst comments and background.)

By Roger Cheng

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Motorola Inc. (MOT) reported a surprising second- quarter profit, albeit a slight one, and forecast full-year earnings above Wall Street expectations even as results continued to be dragged down by the embattled mobile devices unit.

Shares of the Schaumburg, Ill., telecommunications equipment maker were up $ 13.3% in premarket trading, to $8.70.

The company continues to suffer from the lack of eye-catching products, and has been busy with plans to split itself into multiple companies. Once its core business, the handset division saw revenue fall 22% from a year ago and made up only 41% of its total revenue.

"I still think there are plenty of difficulties and challenges to weather through, but these results were pretty good," said Bill Choi, an analyst at Jefferies & Co. "Handsets weren't as bad as feared. The expectations had gotten pretty low with that division."

Contributing to the surprisingly strong results was growth in Motorola's home and networks mobility division, which includes WiMax technology and cable television equipment, and the enterprise mobility division, which includes government radio systems.

"It's surprising how well these divisions are doing given the pressures in these businesses," Choi said.

Motorola reported a second-quarter profit of $4 million, or less than 1 cent a share, reversing a year-ago loss of $28 million, or 1 cent a share. Revenue was $8.08 billion, down from $8.73 billion.

Analysts, on average, forecast a loss of 3 cents a share and revenue of $7.69 billion. Motorola had forecast a loss of 2 cents to 4 cents a share.

Motorola reported shipping 28.1 million handsets, and said it had maintained its share of the global handset market. That's a surprising statement as many had expected it to lose share to rivals such as market leader Nokia Corp. (NOK) and Samsung Electronics Co. Ltd. (005930.SE), which recently overtook Motorola for the No. 2 position. LG Electronics Inc. (066570.SE), meanwhile, has been seen breathing down Motorola's neck.

Motorola maintained its share with only a few product announcements, none of which matched the hype of some of the other devices that came out in the quarter, such as the Samsung Instinct.

The home and networks division saw revenue rise 7% and earnings grow 28%, while the enterprise mobility division posted 6% growth in revenue and profit growth of 24%.

Motorola expects earnings for continued operations for 2008 to be 6 cents to 8 cents a share, and expects third-quarter earnings from continuing operations to be flat, at 2 cents a share. Analysts were expecting per-share earnings of 1 cent for both periods.

The surprisingly strong outlook suggests the first quarter may have been a bottom, Choi said.

The company has announced major restructuring for the coming months as it tries to recover from downturns. In late March it had appeared to cede to demands by billionaire investor Carl Icahn to sell off the handset unit into a separate publicly traded business in 2009.

But earlier this week, Motorola revealed the new plans to divide its home and networks mobility unit into three distinct businesses, which some believe will make them easier to sell off instead. The latest plans include a business for cable set-top boxes operation - including equipment for digital video, Internet- based video and modems - a cellular networks business and a broadband access solutions business.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(David Benoit contributed to this report.)

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