Motorola Mobility which was spun off from Motorola this year managed to report a 40 increase in second quarter revenues largely due to strong sales of its Google Android-based Smartphones.

The strong sales came mostly from Latin America and China. However, company lost $56 million compared to a profit of $80 million in the year-ago quarter. The company's shares dropped 7.5 per cent on Thursday.

The company is facing more fierce competition from rivals such as Apple and its iPhone, as well as from Samsung and HTC, which both offer Android-based smartphones.

Motorola Mobility shipped 4.4 million smartphones in the quarter, an increase from 2.7 million a year earlier.  The company's revenues increased by 28 per cent to $3.3 billion and Motorola's overall phone shipments were 11 million.

Motorola has also introduced its own tablet, called the Xoom, this year. It tablet has not met the company's expectations in terms of sales. The tablet was supposed to get a 4G upgrade in the second quarter, but the update has been delayed until September. 

Motorola announced the Droid Bionic smartphone for Verizon Wireless in January and in April said the 4G phone would arrive during the summer. It has yet to be released.

Motorola is planning to update its product portfolio with two new Android-based tablet PCs and more than two new 4G LTE smartphones in the second half of this year.