Motorola to Split Off Mobile Unit
By DONNA KARDOS
March 26, 2008 9:04 a.m.
Motorola Inc. said it will split itself into two independent, publicly traded companies, separating its troubled mobile-devices business from its broadband and mobility-solutions businesses.
The move sent Motorola shares up 6.4% in premarket trading to $10.35 and meets a request long sought by activist investor Carl Icahn, who is seeking representation on the company's board and sued the company earlier this week to get documents related to the mobile business.
Chief Executive Greg Brown, said the spilt, which the company said two months ago it would study, "will provide improved flexibility, more tailored capital structures, and increased management focus -- as well as more targeted investment opportunities for our shareholders."
The creation of the two stand-alone businesses -- expected in 2009 -- is planned to take the form of a tax-free distribution to Motorola's shareholders, resulting in shareholders holding shares of both companies.
Mr. Brown said Motorola is searching for a new chief executive for the mobile-devices business, which will continue to design, manufacture and sell mobile handsets and accessories globally and licenses a portfolio of intellectual property. Stu Reed was moved aside last month and has since left the company.
The broadband and mobility-solutions business is involved in voice and data communication and wireless-broadband networks.
The mobile business fell behind its peers on third-generation, or 3G, handsets. Motorola is transitioning towards more smartphones and higher end phones, Mr. Brown has said, adding that mobile devices will still be an attractive market several years from now, and that Motorola's recovery would rely on improved products.
The company -- which recently lost its No. 2 position to Samsung Electronics Co. -- has also been hurt by the troubles at Sprint Nextel Corp. Motorola is a supplier of Nextel iDEN phones, which has seen a drop-off in users as customers leave the Nextel network.
Write to Donna Kardos at donna.kardos@dowjones.com5 |
