CHICAGO — Motorola Inc. said yesterday it is cutting 3,500 jobs and taking other steps to reduce costs after misjudgments on pricing and sales forecasts for its high-end phones contributed to its least profitable quarter since 2004.

The move came as the world's No. 2 cell-phone maker reported a 48 percent decline in fourth-quarter earnings, to $624 million, on a steep drop in profitability in the handset business.

Chief Executive Ed Zander announced the cuts at a specially called analysts' meeting in New York, saying Motorola can save about $400 million over two years by eliminating 5 percent of its work force.

But while calling the most recent results disappointing, Zander dismissed any need for a change in overall strategy as some analysts urged when the shortfall in sales and profits was disclosed two weeks ago. He said continuing strong demand for the trend-setting Razr and its offshoot phones puts the company in position to return to double-digit operating margins in the second half of 2007.

"There's no change in strategy," Zander told analysts at the meeting, which was broadcast over the Internet. "There may be some changes in tactics."

He also dismissed suggestions the Razr, which helped turn around the company two years ago, is running out of steam.

"It's funny, I keep reading about Razrs being tired," he said on an earlier conference call. "We sold more Razrs in quarter four than in any quarter we ever had. We now have sold over 75 million Razrs worldwide."

Facing stiffer competition from its rivals' new products, Motorola aggressively cut prices of its phones during the quarter to gain market share but at the expense of profit margins. Executives also acknowledged misjudging some markets and, as Zander put it, making wrong assumptions about how many phones would sell at what price.

The decision to shed jobs comes after Motorola's recent $3.9 billion acquisition of Symbol Technologies Inc., a maker of barcode scanners and handheld computers, had increased the Schaumburg, Ill.-based company's work force to 70,000 from about 67,000. The cuts are to be spread across the company globally and completed in the first half of 2007.

Coupled with its prediction that it will post full-year sales of $46 billion to $49 billion, above analysts' consensus estimate of $45.9 billion, the news sent Motorola's stock higher despite the lackluster earnings numbers.

Shares gained 56 cents, or 3 percent, to close at $19.27 in heavy trading on the New York Stock Exchange. More than 70 million shares were bought and sold, or more than double the recent average volume.