MOTOROLA INC. $22 (New York symbol MOT; WSSF Rating: Above average) is the world’s second-largest maker of mobile phones, after Nokia Corp. This business supplies about 55% of Motorola’s revenue. The company also supplies infrastructure equipment to wireless phone companies, and makes other communications gear such as two-way radios and high-speed Internet modems.

In December 2004, Motorola handed out its remaining 68% stake in chip maker Freescale Semiconductor to its investors, as part of a broader restructuring.

In the three months ended December 31, 2005, Motorola earned $0.47 a share from continuing operations, up 67.9% from $0.28 a share a year earlier. If you exclude unusual items, the company would have earned $0.35 a share in the most recent quarter. Revenue rose 18.2%, to $10.4 billion from $8.8 billion.

Much of Motorola’s recent success is due to strong demand for its ultra-thin Razr phones. Razr shipments doubled in the fourth quarter from the third, and accounted for 20% of Motorola’s total mobile phone sales. That’s particularly good news, since Razr’s generate higher profits than other Motorola phones.

Motorola recently teamed up with Apple Computer to develop a combination phone and music player called the Rokr. However, Apple limited the Rokr’s music storage capacity, to avoid competing too fiercely against the iPod, so Rokr sales suffered.

Motorola still feels a phone/music device has huge potential. It plans to launch a new music service called iRadio, which will let users download music to their phones for $7 a month. This service should help Motorola compete with satellite radio services, as well as a rumored iPod phone from Apple.

The stock fell to $15 in April 2005, but rose to $25 in November. It now trades at 17.3 times the $1.27 a share that the company should earn in 2006. That presents an attractive buying opportunity, especially since Motorola spends 9% of its revenue of roughly $14.60 a share on research, so it’s more profitable than it looks. The $0.16 dividend yields 0.7%.

Motorola is a buy.