Former AIM (Apple, IBM, Motorola) Alliance member Motorola surprised Wall Street yesterday by returning third-quarter earnings that were twice those expected by analysts.

Net earnings and sales for the quarter were both up five per cent against the year-ago quarter. The company said it had chosen to announce its results early to provide investors with a more complete picture of its finances, after financial ratings agency Moody's downgraded the company's credit rating

Net earnings for the quarter ended September 30 rose to $116 million or $0.05 per share, compared to $111 million in the year-earlier quarter. Sales rose to $6.8 billion from $6.5 billion a year earlier, the company reported. Analysts polled by Thomson First Call expected earnings per share of $0.03; Motorola's last prediction of its per-share earnings for the quarter was also $0.03.

The company expects fourth-quarter sales to total between $7.5 billion and $7.8 billion, with earnings per share between $0.08 and $0.12, the company said. Analysts predict earnings per share of $0.12 in the fourth quarter, based on earlier Motorola guidance of $0.12.

Excluding special items, net earnings were $132 million, compared to $133 million a year earlier, the company said.

The company increased orders in the quarter by 25 per cent compared to the year-earlier period, it said.

Semiconductor division

Motorola announced plans to spin-off its semiconductor arm as a separate business last week. This division developed the technology used in PowerPC G4 chips used in many Macs.

In its third quarter, the semiconductor division saw revenues fall four per cent, to $1.2 billion for the quarter. It was affected by lower capital spending by network operators and increased competition in the mobile phone handset market. In other areas, the company won new contracts, including video games, car navigation systems, and handheld computers.

Conversely, Motorola's personal communications segment brought in the most revenue of all its business areas during the quarter, at $2.9 billion, an increase of eight per cent compared to the previous year. Orders were up 44 per cent, to $3.7 billion, the company said. It shipped around 20 million mobile phones during the quarter, up 19 per cent on the previous year. Demand for Motorola handsets strengthened in North America, but sales decreased in Asia as the company lost marketshare in China, it said.