NEW YORK (CNN/Money) - Motorola, the world's second largest manufacturer of cell phones, reported fourth-quarter sales and earnings that surpassed Wall Street's expectations in what looks to be a good start to the Ed Zander era for the struggling tech firm.

The Schaumburg, Ill.-based company reported net income of $489 million, or 20 cents a share, compared to net income of $174 million, or 8 cents a share, a year ago. Excluding one-time items, Motorola earned 17 cents a share, compared to 13 cents in the same period last year. Analysts were expecting earnings, excluding these items, of 13 cents a share.

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For the full year, Motorola reported earnings, excluding special items, of 25 cents a share, compared to a profit of 12 cents a year ago.

Motorola posted sales of $8 billion, an increase of 4 percent from $7.7 billion a year ago. Analysts were expecting revenues of $7.7 billion. For the full year, sales dipped slightly to $27.1 billion from $27.3 billion in 2002.

Zander, the highly respected former president of Sun Microsystems, took over as chairman and CEO of Motorola this month and Wall Street is hoping that he can turn the company's fortunes around. Motorola has been suffering from low profit margins in its cell phone business. The company is also seeking to spin-off its semiconductor division, which lost money in 2003.

Motorola's stock has rallied along with other tech and telecoms as of late, on hopes of a pickup in business spending. Shares of Motorola (MOT: Research, Estimates) hit a new 52-week high in regular trading on the New York Stock Exchange Tuesday, gaining 10 cents to $17.05. The stock dipped slightly in after-hours trading according to Instinet, however.

The better-than-expected results were a bit of a surprise since the company had some high-profile problems in its cell phone division at the end of 2003.

Motorola was late getting some new camera phones to the U.S. and European markets for the critical holiday shopping season. For this reason, sales in the company's cell phone division fell 3 percent from a year ago. Profit margins in the unit fell as well.

Sales and profit increases in other large divisions, including the semiconductor, global telecom solutions and commercial, government and industrial solutions businesses, appeared to help offset the poor quarter for the cell phone division.

"These results provide further evidence that top-line growth has returned and that further improvement in profitability can be achieved," said Zander in a written statement. "Motorola is a company with great potential, and I'm absolutely delighted to have joined it at this important next stage of its evolution as a high technology leader."

To that end, Motorola provided Wall Street with encouraging guidance for the first quarter, saying that it expected sales to come in at a range of $6.4 billion to $6.8 billion. Analysts were expecting $6.4 billion. Earnings should be between 5 cents and 7 cents a share, in line with the consensus estimate of 6 cents a share.

James Faucette, an analyst with Pacific Crest Securities, said one reason sales should be higher than originally expected in the first quarter is because camera phone sales that should have taken place in the fourth quarter would be shifted to the first quarter. Faucette added that the fact that the semiconductor division reported a slight increase in sales was a good sign as Motorola prepares for the initial public offering of that business.

But Motorola has had a history of failing to live up to promises it has made to Wall Street, a practice that caused some analysts to dub it a "serial warner." That will need to come to a stop under Zander, analysts said.

Ren Zamora, an analyst with Loop Capital Markets, said that Zander's so-called honeymoon period with Wall Street will be fairly brief. "It will be a quarter at best. Investors want him to come in and see some action," Zamora said.

Part of such action could be further strategic changes.

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Motorola touted new plasma screen televisions at the Consumer Electronics Show in Las Vegas earlier this month and recently started providing adapters to Vonage, a leading provider of Internet-based phone services. So it's possible that Motorola will make an even more consumer-oriented push, said John Bucher, an analyst with Harris Nesbitt Gerard.

But most of all, investors will want to hear just exactly how Zander plans to revamp the cell phone business in order to deal with increasing competition from the likes of Samsung and Siemens, which are numbers three and four in global cell phone market share.

During a conference call with analysts, Zander said he was optimistic that Motorola would win more market share quickly and that the biggest problem the company faced was execution, as opposed to unpopular phones or poor technology.

"I think we have better products. We have to get them out there to our customers when we say we will and our products will win on the shelves," Zander said.

Of course, investors would like to see Motorola's cell phone profit margins wind up being closer to that of industry leader Nokia's as well. Nokia recently said it expects its cell phone operating margins for the quarter to come in at close to 25 percent.

Motorola's operating margins in its cell phone business during the fourth quarter, excluding one-time items, were a paltry 5.4 percent. Motorola president Mike Zafirovski said during the conference call that operating margins would increase in the first quarter and that cell phone sales should be 20 to 25 percent higher than a year ago.

Analysts quoted in this story do not own shares of Motorola and their firms have no investment banking relationships with the company.