Motorola considering separation of mobile devices unit

Motorola is looking at alternatives for the business that may include the separation of mobile devices from its other two units: enterprise mobility solutions and home and networks mobility.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 1/31/2008

Motorola Inc may soon sell off it struggling mobile devices business in an effort to recapture the market leadership the unit once held and improve company shareholder value.

The unit has been a financial trouble spot for Schaumburg, Ill.-based Motorola for several quarters now, with the company last week reporting significant losses for Q4 and full-year 2007 on the business’ poor performance. 

Motorola today announced after the closing bell that it is looking at alternatives for the business that may include the separation of mobile devices from its other two units: enterprise mobility solutions and home and networks mobility.

"All of our businesses have exceptional people, products and intellectual property and the ability to achieve category leadership in their markets," said Greg Brown, Motorola president and CEO, in a statement. "We are exploring ways in which our mobile devices business can accelerate its recovery and retain and attract talent while enabling our shareholders to realize the value of this great franchise."

Brown admitted last week in the company’s presentation of Q4 and 2007 numbers that “the recovery in mobile devices will take longer than expected and there is a lot more work to be done.” At that time, he also said Motorola was aggressively rationalizing its cost structure and “working to get mobile devices back on track.”

Brown took over for former Motorola CEO Ed Zander on January 1. Zander announced his resignation in late November as pressure continued to mount from stockholders -- in particular billionaire corporate raider Carl Icahn -- that were crying out for profitability at the company. Zander’s resignation announcement was followed days later by the resignation of CTO Padmasree Warrior, who was best know for her work in seamless mobility at Motorola and has moved to Cisco’s CTO seat.

Motorola, which was the long-time champ of the mobile phone industry, is now ranked as the world’s third largest mobile-phone maker behind Nokia and Samsung in terms of market share and shipments. Researchers have attributed Motorola’s fall from mobile grace to its inability to replace its popular Razr model.

The company said in its statement today that it does not intend to discuss the alternative plans for the unit unless or until its board of directors has approved a definitive transaction or the process is otherwise complete. “There can be no assurance that any transaction will occur or, if one is undertaken, its terms or timing,” the company’s statement reads.

Motorola’s stock closed today at $11.50, up from its $11.15 open and Wednesday’s $11.29 close on rumors of the announcement.