Wed Mar 26, 2008 3:30 pm
Motorola today announced a plan to split its struggling cell phone business from other operations to form two separate publicly traded companies.
The widely deal comes as the cell phone maker faces a second straight year of agitation from billionaire investor Carl Icahn, who has become increasingly frustrated with Motorola's eroding phone sales.
Executives said the move will allow the two companies to better focus on their respective strengths and weaknesses, while accelerating the turnaround plan for the cell phone unit, which has seen its fortunes slip after trend-conscious customers lost interest in the RAZR flip phone.
"Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and Board of Directors, together with independent advisors," said Greg Brown, Motorola's president and chief executive officer. "Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus - as well as more targeted investment opportunities for our shareholders."
The two businesses are expected to be a tax-free distribution to Motorola's shareholders resulting in shareholders holding shares of two independent and publicly-traded companies:
- The Mobile Devices business is an industry leader in multi-mode, multi-band communications products and technologies. The business designs, manufactures and sells mobile handsets and accessories globally with integrated software solutions that incorporate the latest personal communications technologies. It also licenses a portfolio of intellectual property.
- The Broadband & Mobility Solutions business includes Motorola's Enterprise Mobility, Government and Public Safety, and Home and Networks businesses. These businesses manufacture, design, integrate, and service voice and data communication solutions and wireless broadband networks for enterprises and government and public safety customers worldwide. These businesses also provide end-to-end digital and Internet Protocol (IP) video solutions, cellular and high speed broadband network infrastructure, cable set-top receivers, and associated customer premise equipment for residential and commercial wireless network system access.
"Our priorities have not changed with today's announcement," added Brown. "We remain committed to improving the performance of our Mobile Devices business by delivering compelling products that meet the needs of customers and consumers around the world. As part of that effort, we have undertaken a global search for a new chief executive officer for the Mobile Devices business. We believe strongly in our brand, our people and our intellectual property, and expect that the Mobile Devices business will be well-positioned to regain market leadership as a focused, independent company."
Specifics of the deal haven't been disclosed, but Motorola said the split would take place in 2009.
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