Motorola posted a second-quarter net profit of $119 million, or 5 cents a share, compared with a loss of $2.3 billion, or $1.02 a share, in the year-ago quarter. Excluding one-time items, including reversal of employee severance, gains on sales of investments and reversal of reserves that had been set aside, it posted a profit of a penny a share versus 2 cents a year ago.

Sales slipped to $6.2 billion from $6.7 billion a year ago, at the high end of the company's estimate.

Motorola said it expects third-quarter earnings of breakeven to 2 cents a share on revenue of $6.3 billion to $6.5 billion. It expects earnings, excluding special items, of 2 cents to 4 cents a share. Analysts had expected earnings of 5 cents a share on revenue of $6.5 billion for the third quarter.

"That's indicative of some difficult market conditions in many of their businesses. It also reflects some riskiness around the handset business." analysts said.

Sales at Motorola's mobile phone unit fell 13 percent from last year to $2.3 billion, while its operating earnings rose to $91 million from a profit of $3 million a year ago. Motorola's semiconductor unit saw sales fall 11 percent from last year to $1.1 billion. Its operating loss fell to $125 million from $1.3 billion last year. Sales at its wireless equipment unit fell 17 percent to $1 billion.