Motorola Inc forecast a higher-than-expected profit for the current quarter, when it will start selling two new Google Android phones in hopes of regaining ground lost to iPhone.

After surprising Wall Street with a third-quarter profit, Motorola, whose shares rose 9 percent, forecast fourth-quarter earnings per share range with a midpoint 2 cents above Wall Street estimates.

Charter Equity Research analyst Ed Snyder said Motorola, which has been losing ground in cellphones for more than two years, had improved results in all its units and appeared to be making big strides to turning around the handset unit.

The company's been losing market share and money (in handsets). It looks like it may lose a little more market share but they're clearly on the path to making money again, he said.

Motorola's Co-Chief Executive Sanjay Jha, who also heads the company's mobile device business, told analysts on a conference call that the company would ship fewer phones in the current quarter, as it weeds out unprofitable phones in favor of advanced phones.

But the executive said the company's cellphone operating loss would narrow and that the unit would break even for at least one quarter in 2010.

Our smartphone traction is the critical driver of our financial performance said Jha who promised more new devices and supply deals with network operators in the first quarter.

Charter Equity's Snyder said Motorola's smartphone sales in the current quarter could hurt rivals such as BlackBerry maker Research In Motion and Palm Inc

.

The report follows the recent announcement of two phones based on Google Inc's Android system, around which Jha reorganized Motorola's entire cellphone business.

Top U.S. operator Verizon Wireless, a unit of Verizon Communications and Vodafone Group Plc , has already started heavily advertising one of these devices, Droid, as an alternative to iPhone, from Apple Inc .

Motorola posted a third-quarter profit of $12 million, or 1 cent per share, compared with a loss of $397 million, or 18 cents a share, a year earlier.

Excluding one-time items, it would have posted a profit of 2 cents per share, compared with the average analyst expectation for the company to break even, according to Thomson Reuters I/B/E/S.

Motorola also deepened its 2009 cost cutting plan by $100 million to $1.9 billion.

The improving results were driven by an improvement in the mobile devices operating loss to $183 million from $840 million a year earlier and from $253 million in the second quarter.

Revenue fell 27 percent to $5.45 billion, compared with Wall Street estimates of $5.54 billion.

Motorola shipped 13.6 million handsets in the quarter, compared with 25.4 million in the same quarter the year before.

While this was below analyst expectations, Avian Securities analyst Matthew Thornton said investors are more interested in Motorola's prospects for the current quarter.

Motorola forecast fourth quarter operating earnings per share in a range of 7 cents to 9 cents. Analysts had expected a profit of 6 cents per share on average.

Motorola also appointed Edward Fitzpatrick chief financial officer. He had been its acting CFO.

Motorola shares rose 73 cents or nearly 9 percent to $8.69 in morning trade on New York Stock Exchange.

(Reporting by Sinead Carew; Editing by Derek Caney)

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