UPDATE:Motorola CEO Jha Sees Significantly Better Results In '10

Motorola Inc.'s (MOT) handset business should perform significantly better financially next year, according to co-Chief Executive Sanjay Jha.

The company's troubled handset unit expects higher fourth-quarter sales on a sequential basis, largely thanks to the launch of its two high-profile smartphones, Jha said. He added that he expects the handset business to break even in at least one quarter next year, where results will be driven by its smartphone portfolio.

"Taken the first steps to position ourselves to addressing the mobilization of the Internet," he told analysts during a conference call on Thursday.

He added that a majority of its smartphones next year will feature its MotoBlur user interface, which is in the Cliq for T-Mobile USA.

The smartphone business may grow faster than many people expect, Jha said, but the feature phone business has a limited "profit pool." While Jha believes the company can make a profit off of feature phones, it will only be a modest one, he said.

He eventually wants to bring devices using Google Inc.'s (GOOG) Android software closer to the feature phone market by bringing wholesale phone prices down to $200, but Jha declined to give a timeframe for when prices would drop that far. He added that the price drop was key to the rapid expansion of Android to consumers.

On iDEN technology, which powers Nextel phones, Jha said he sees a modest decline in the business next year.

Co-CEO Greg Brown, who runs the home networks and enterprise mobility businesses, said the company is focused on cost cuts. The company expects to cut $1.9 billion from full-year expenses versus 2008, above the $1.8 billion it previously it projected.

Chief Financial Officer Edward Fitzpatrick said the company cut its headcount by 9,700 for the year.

Sales in the home networks business is expected to be flat to slightly down, as continued weakness in the housing market weighs on the company, Brown said.

Enterprise mobility sales are expected to be higher in the fourth quarter as a result of stimulus funds, which is starting to flow to local governments, offsetting other areas of revenue deterioration, Brown said. The overall environment is stabilizing, he said.

Motorola shares rose 6.2% to $8.45 in pre-market trading.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; [e-mail]