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Motorola to break itself in two

Wed, 03/26/2008 - 8:15am
Brian Santo

Carl Icahn wins. Motorola will split its mobile device unit from its broadband operations, a move that Motorola investor Icahn has been agitating for.

Motorola said that it has begun the process to break the two operations into separate, publicly traded companies.

The Mobile Devices business designs, manufactures and sells mobile handsets and accessories and licenses a portfolio of intellectual property. The operation has been rapidly shrinking, putting a drag on Motorola’s financials.

Motorola said that it intends to keep supplying compelling mobile products, but the problem is that it has not had a compelling product since the Razr phone, which has long since lost its shine. The company has lost market share in the mobile handset market and has dropped from the world’s second-largest supplier to the third-largest.

Investors, notably Icahn, have been advocating the split for more than a year. There is no clear plan for reviving the operation, however, whether it’s split off or not. Motorola said it is looking for a CEO to take over the mobile phone operation, and the problem will no doubt be dumped in that person’s lap.

The Broadband & Mobility Solutions business includes Motorola’s Enterprise Mobility, Government and Public Safety, and Home and Networks businesses. These businesses design, manufacture and service voice and data communications solutions and wireless broadband networks, along with network and consumer premises equipment (CPE).

"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," said Greg Brown, Motorola’s president and CEO.

The company does not expect to complete the split until 2009. Current Motorola shareholders will receive a tax-free distribution; they will end up holding shares of both of the new companies.

More Broadband Direct:

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Verizon asks FCC to ease consumers’ switch from cable TV services 

CableCards surpass 4M mark in STBs 

Bresnan buys AdGorilla’s RevGen ad servers 

SureWest launches nationwide remote monitoring service 

Motorola to break itself in two 

Akimbo picks Harmonic’s Rhozet video transcoding technology 

Motorola shows off with new technologies 

Broadband Briefs for 3/26/08
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