The biggest mobile-phone maker in the US, Motorola, recovered dramatically in the second quarter, posting a modest $26 million profit, signalling the worst could be over for the telecommunications equipment maker after several quarter losses.

Qualcomm veteran, Dr Sanjay Jha, hired by Motorola as a co-CEO in August last year, (See: Motorola poaches Qualcomm CFO to head loss-making handset division) along with co-CEO Greg Brown have managed to turn the loss making company around within a year after initiating aggressive cost cutting measures, setting the stage for a comeback in the highly competitive smart phone market.

The Schaumburg, Illinois-based Motorola reported sales of $5.5 billion in the second quarter of 2009, a decline of 32 per cent or $8.1 billion compared to a year ago.

The company had sales of $1.8 billion in mobile devices by shipping 14.8 million handsets while its enterprise mobility solutions had sales of $1.7 billion.

Analysts, investors and Wall Street applauded the efforts of the two CEO's in turning the company around and end cash burning. Analysts hope that the company would fare better once the effects of the recession wear off.

Much of the turnaround has come because of the bold initiative taken by both the CEOs in cost cutting. Since 2007, Motorola has reduced its workforce by about 16,000. In January, it cut 4,000 jobs, roughly 6 per cent of its workforce, with 3,000 jobs going from the mobile-devices business. (See: Motorola to slash 4,000 jobs, equivalent to 6 per cent of workforce)

Sanjay Jha said that the workforce has been reduced by 30 per cent in mobile devices from the time he arrived a year ago and added that the company expects to cut $1.8 billion in costs by the end of the year. That figure includes $700 million of new savings on top of a previously announced plan to cut $800 million in expenses.

Motorola has seen its flagship wireless device business come under attack by a combination of the economic slowdown as well as blistering competition from rivals. Sales had plummeted by almost half in three years since the company's failure to repeat the success of the Razr, the popular handset it had introduced five years ago.

Overall sales of cell phones have been slowing while smart-phone devices such as the BlackBerry and iPhone have taken much of the top segment market share.

Motorola said that it wants to take advantage of the current popularity of smart phones since, although it represents a small percentage of global handset volume, the profit margins are high.

For the sixth straight month, Motorola devices did not figure in the Avian Securities ranking of best-selling US wireless phones as the company lost its US market ranking to Samsung. With a global share of 6.3 per cent, analysts say the once major market player with a 26-per cent share could end up as a peripheral player, and both the CEO's are well aware of this.

In a conference call with analysts, Jha said that he is not concerned about regaining market share and large volumes, but interested in the sale of smart phones and improving the average selling price.

Jha said in an interview that the company would introduce two Android phones based on Google's Android operating system through two US carriers and multiple carriers overseas and two more in the first quarter. Although he did not name the carriers, analysts feel that Verizon Wireless will be one of them while the other may be either AT&T or T-Mobile USA.

Jha is working on making Motorola a tightly focused supplier of mostly high-end smart phones that feature a user-friendly operating system and display. In the case of Motorola, the phones would run on the Google-backed (GOOG) Android operating system, which according to Jha is a flexible operating environment that has attracted thousands of developers.

Motorola had spent months last year in searching for an executive to run its handset division, with several top candidates reportedly spurning the job. At the same time, the company had been hit last year by a spate of high-profile resignations, including two successive chief technology officers.

Jha was taken in primarily to head the cell phone division as part of a plan to spin off the division, which he was to later lead as an independent company.

But with the onset of the recession, the company put on hold to separate the company, but it still intends to do once the economy improves.