Motorola announced better-than-expected earnings for the second quarter on Thursday, but the company is still plagued by declining revenue and losses in its cellphone unit, which it expects to spin off next year. The maker of mobile phone and other telecommunications equipment based in Schaumburg, Ill., reported a profit of $4 million, in contrast to a loss of $28 million in the period a year earlier. Revenue of $8.08 billion for the quarter was 7.4 percent below the $8.73 billion reported in the period last year.

In the mobile devices division, sales fell 22 percent, to $3.3 billion. The division reported an operating loss of $346 million, compared with a loss of $332 million a year ago.

Despite that, Gregory Brown, Motorola’s chief executive, said the company saw improvements in the division, particularly related to increased sales of the Moto W755 mobile music phone sold by Verizon Wireless. One reason was because Motorola sought to cut costs to improve margins.

Sales in the home and networks division, which makes cable modems and digital video recorders, were a bright spot, up 7 percent. Motorola plans to introduce 34 phones in the second half of the year, many of them with touch screens and messaging capabilities.

Motorola shipped 28.1 million handsets in the quarter, enough to maintain its market share, the company said.

After a review of its businesses earlier this year, Motorola said it would split itself into two separate publicly traded companies and spin off its unprofitable mobile phone unit to investors. Mr. Brown said the company has made progress untangling the divisions, but it is a complicated process and their analysis is not complete because there are several issues — particularly related to patents and taxes — which have yet to be figured out.

And Motorola has also been unsuccessful in finding a new chief executive to run the mobile phone business.

Mr. Brown said he hoped the spinoff would be complete by the third quarter of next year.

“This is a great opportunity to get greater clarity and improve our overall cost structure,” Mr. Brown said.

Shares of Motorola rose 12 percent in midday trading, to $8.61.

Source: http://www.nytimes.com/2008/08/01/business/01motorola.html?_r=1&ref=technology&oref=slogin