Prospects brightened for the handset maker last quarter, but much improvement came from cost-cutting. New smartphones will face strong competition from Apple, Palm, and others

Holy qwerty keyboards, Wall Street. Struggling Motorola posted a profit—albeit a small one—for the first time in a year. The Schaumburg (Ill.) handset manufacturer reported earnings of $26 million, or 1¢ a share, up from $4 million a year earlier.

Even more promising, Motorola said that in the current quarter it may turn a profit of as much as a cent, excluding charges related to expense reduction moves or other one-time events. The period that ended in June “was a solid quarter for us,” co-CEO Greg Brown says in an interview. “It was a return to solid fundamentals. It’s good to get some sense of momentum back.”

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