Motorola to split business into two in 2011

Motorola said it aims to split into two companies in the first quarter of 2011, one to focus on cellphones and television set-top boxes, and the other on enterprise networking.

Motorola said yesterday that splitting into two independent and publicly traded companies would help improve its position in the different markets.



Motorola shares rose 2.3 per cent to $6.80 in extended trade after the news, which followed months of speculation over what steps management would take to revive its business.



The company's money-losing mobile devices unit has been struggling to compete with new smartphones, and has not had a blockbuster since the Razr, although its Droid phone generated some buzz since launching late last year.



Its set-top box business had also suffered due to a weak economy, while its wireless network equipment business had been hit by a consolidation among telecom operators.



"It's hard to work with a company when you don't know where they'll be a year from now. So this removes uncertainty," Broadpoint Gleacher analyst Mark McKechnie said of Thursday's announcement. "I do think the smaller divisions can offer some operational efficiency and focus."



Motorola's latest financial results show its mobile phone business had revenue of $7 billion (£4.47 billion) for 2009. The enterprise wireless business had revenue of $2 billion (£1.2 billion) while home and network sales brought in another $2 billion.



"We believe that as independent companies each business will be best positioned to successfully pursue the respective strategies and opportunities for growth," said Greg Brown, who was co-chief executive officer of Motorola and will now become CEO of the enterprise mobility and networking business.



Sanjay Jha, the company's other CEO, will head the mobile devices and home business, it said.



Motorola said the move will take effect through a tax-free stock dividend of shares in the new company. Its enterprise and network equipment business will be the entity responsible for Motorola's current public debt and will be capitalized to achieve an investment grade rating, it said.



Both companies will use the Motorola brand. Additional details including the capital structure of the companies will be announced later, it said.



Jha said that the combination of businesses dealing with mobile phones, cable set-top boxes and other home entertainment devices was ideal to meet consumers' demands for "converged" or seamless access to television, phone and Internet.



Motorola had previously said it would split its handset unit from its other divisions, but executives also looked at other alternatives.



Motorola had tried to sell its networking division but a source familiar with the matter recently said the process had slowed down.



Tavis McCourt of Morgan Keegan said he was not sure whether the combination of the handset and cable set-top box businesses would yield synergies, but still saw the plan as positive.



"I'm glad they're doing it. It's nice they're putting timing behind it. It's a sign they're very confident in their handset business this year," he said.

Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    Recruitment Genius: 1st Line Support - Helpdesk Analyst

    £18000 - £21000 per annum: Recruitment Genius: This company is a customer focu...

    Recruitment Genius: Business Development Executive

    £16000 - £18000 per annum: Recruitment Genius: A Business Development Executiv...

    Recruitment Genius: Software Implementation and Support Consultant

    £28000 - £35000 per annum: Recruitment Genius: A consultant is required to pro...

    Recruitment Genius: Web / Graphic Designer

    £10000 - £16000 per annum: Recruitment Genius: Due to rapid customer growth, a...

    Day In a Page

    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot
    Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

    Poldark star Heida Reed

    'I don't think a single bodice gets ripped'
    The difference between America and Israel? There isn’t one

    The difference between America and Israel? There isn’t one

    Netanyahu knows he can get away with anything in America, says Robert Fisk
    Families clubbing together to build their own affordable accommodation

    Do It Yourself approach to securing a new house

    Community land trusts marking a new trend for taking the initiative away from developers
    Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

    David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

    The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
    With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

    Money, corruption and drugs

    The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
    America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

    150 years after it was outlawed...

    ... America's first slavery museum is established in Louisiana
    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
    Tony Oursler on exploring our uneasy relationship with technology with his new show

    You won't believe your eyes

    Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
    Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

    Moores must go. He should never have been brought back to fail again

    The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn