Motorolaposted a small quarterly profit as it sold more mobile phones than expected and narrowly kept its No. 3 global ranking in the mobile phone market ahead of LG Electronics.
Shares jumped after Motorola also said it expects to report a profit for the full year of 6 cents to 8 cents per share on continuing operations.
Analysts were looking for full-year earnings of 3 cents per share, according to Reuters Estimates.
"They've managed to minimize handset share losses even in the face of fairly aggressive competition particularly from the Koreans in North America," said Nomura analyst Richard Windsor, referring to LG and Samsung Electronics.
"They've managed to hang on to more market share than we expected and managed to do it without cutting prices too much," he said.
Motorola said it shipped 28.1 million phones in the second quarter and maintained its share of the market. Nine analysts surveyed by Reuters had on average expected 26.6 million.
Second-quarter profit was $4 million and broke even on a per share basis, compared with a loss of $28 million, or 1 cent a share, in the year-ago quarter.
Excluding charges, Motorola earned 2 cents per share, beating the average Wall Street forecast of a loss of 3 cents per share, according to Reuters Estimates.
Revenue fell 7 percent to $8.1 billion but topped the average forecast by analysts of $7.7 billion.
Motorola forecast third-quarter earnings per share from continuing operations in a range of break-even to 2 cents. It said its outlook excludes charges from its operating expense reduction initiatives or other items.
While the results were positive, analysts said Motorola still had a long way to go to turn around, after it has been losing market share to Finland's Nokia and other rivals for more than a year.
"It still has a mountain to climb. Its product portfolio is still not competitive enough and sustaining its position in the North American market in the second half of 2008 may prove challenging," said Geoff Blaber, an analyst at CCS Insight.
Motorola said its mobile devices business posted a wider operating loss of $346 million compared with an operating loss of $332 million a year ago on revenue that fell 22 percent to $3.3 billion.
Motorola's television set-top box and networks equipment division posted operating earnings of $245 million, up 28 percent from a year ago, on sales of $2.7 billion, which were up 7 percent from a year earlier.
The enterprise mobility unit saw sales rise 6 percent to $2 billion from the year-ago quarter.
Motorola, which has said it plans to spin off its mobile device business next year, has seen its shares fall more than 70 percent since October 2006 when its financials first started to deteriorate. It has also faced pressure from activist investor Carl Icahn to turn around the business.
Its shares rose to $8.70 in premarket trade from their previous New York Stock Exchange close of $7.68.