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Motorola to consider selling handsets unit

Motorola last night caved in to a shareholder rebellion and promised that it would consider selling its famous mobile handsets division.

The title of the press release was long – "Motorola to explore structural and strategic realignment of its businesses to enhance shareholder value" – but the message was clear enough: Carl Icahn has won. The billionaire investor had been pressing for a break-up since he started to build a 3.3 per cent stake and, it was revealed last night, he recently told the Motorola board that he would push to have several of them ousted at the company's next shareholder meeting.

Motorola said the handsets division could be spun off or sold, leaving the rump of the $28bn (£14.1bn) company to focus on corporate network technology and Wi-Fi hardware.

Although the handsets division accounts for half of Motorola's sales, it has slumped into the red after squandering the marketing buzz that came with the success of its ultra-thin Razr phone. It failed to follow up with another popular model, its market share has collapsed and in December it ousted its chief executive, Ed Zander.

Greg Brown, Mr Zander's successor, said yesterday: "We are exploring ways in which our mobile devices business can accelerate its recovery and retain and attract talent while enabling our shareholders to realise the value of this great franchise."

Mr Icahn, though, signalled last night that he would not let up the pressure on Motorola's management, and still intends to force a shareholder vote to put his candidates on the board at the company's annual meeting in the spring. "Motorola is finally moving in the right direction," he said, "but it certainly still has a long way to go."

Rumours earlier this week suggested that a Chinese buyer could make a play for the handsets division, but Motorola's advisers are now likely to try to arrange an auction of the business.