Motorola, the world's second-largest mobile phone maker, announced a sharp moderation in fourth-quarter profits despite rocketing sales as it weathered a fierce price war.

The Illinois-headquartered group said its quarterly net profits were almost sliced in half to 624 million dollars, compared with 1.2 billion dollars in the same period a year ago.

Motorola chief executive Ed Zander told analysts on a conference call in the wake of the earnings release that the company would be laying off 3,500 workers this year in a bid to slash costs.

The firm had already warned investors that its profits were likely to sag.

"As I said earlier this month, we are disappointed with our fourth-quarter operating earnings performance," Zander said in a statement.

The firm reported earnings per share of 25 cents, compared with 47 cents in the prior year, generally in line with most Wall Street analysts' forecasts.

Despite the profit slowdown, Zander stressed that quarterly sales rocketed by 17 percent to a record 11.8 billion dollars.

"The company generated strong revenue growth and met or exceeded our goals in many areas during the quarter. I am confident that we remain well positioned for continued growth and success," the Motorola CEO said.

Company executives are forecasting sales of between 10.4 and 10.6 billion dollars for the first quarter of 2007.

Zander said Motorola hoped to save around 400 million dollars over two years following the job cuts.

The company said it shipped a record number of 65.7 million new handsets during the quarter, marking a 47 percent spike compared with the fourth quarter of 2005.

The firm estimated it had a 23 percent share of the global cellphone market, behind Finland's Nokia.

Motorola said full-year 2006 net profits slowed to 3.7 billion dollars from 4.6 billion in 2005, as annual earnings per share decelerated to 1.46 dollars from 1.81 dollars in 2005.