updated 1/19/2007 11:22:46 AM ET 2007-01-19T16:22:46

Motorola Inc., the world’s second biggest mobile phone maker, said on Friday fourth quarter revenue rose but its profit fell due to weakness in its handset business.

Its profit from continuing operations of $528 million or 21 cents a share down from $1.177 billion or 46 cents a share in the year ago quarter, when Motorola reported a large gain from the collection of debt from Turkish phone company Telsim.

Motorola had warned investors earlier this month that its quarterly earnings and revenue would fall short of estimates.

It said its earnings were higher than its estimate for 13 cents to 16 cents a share, including 10 cents in special charges, because of a tax accounting item.

Including discontinued operations, the company’s net profit fell to $624 million, or 25 cents a share, from $1.2 billion, or 47 cents a share, a year earlier.

Chief Executive Ed Zander said in a statement the company was “disappointed’ with the company’s earnings, which analysts said indicated deep discounts on cell phone prices.

Revenue rose to $11.8 billion from $10 billion in line with its estimate for revenue of $11.6 billion to $11.8 billion.

Motorola said it shipped 65.7 million handsets in the quarter, up 47 percent from a year earlier, and its share of the global market rose to 23.3 percent, up almost one percentage point from the third quarter.

It expects first quarter sales to fall to between $10.4 billion and $10.6 billion.

Analysts on average were expecting first quarter revenue of $10.5 billion, according to Reuters Estimates.

Schaumburg, Illinois-based Motorola trails only Finland’s Nokia in the global handset market.

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