Of the well known mobile phone handset makers in the
industry, Motorola is certainly one of the big names. Motorola had huge success
with its first generation RAZR phone in 2005. Since the introduction of the
first RAZR, Motorola has been having a hard time gaining ground on the market
leaders in the mobile handset market.
in January 2008 that Motorola announced it was considering leaving the handset business after reporting a Q4
2007 loss of $1.2B and seeing its handset market share drop to only 23%. In
February, DailyTech reported that
Motorola was in a three-way tie for the next to bottom spot among handset
makers with Samsung, Nokia and Sony/Ericsson for customer satisfaction.
Rather than simply sell off its mobile phone
operations Motorola announced today that it wants to create two
new stand-alone companies out of its current company arrangement. Motorola
proposes to create a Mobile Devices business, which would design, manufacture
and sell mobile handsets and accessories globally. This business would also
license a portfolio of intellectual property.
The other business would be the Broadband & Mobility
Solutions business that would include Motorola’s Enterprise Mobility,
Government and Public Safety, and Home and Business Networks businesses. This
business would make, design, integrate and service voice and data
communications equipment and wireless broadband networks worldwide.
Motorola’s chief executive officer and president, Greg
Brown, said in a statement, “Our decision to separate our Mobile Devices and
Broadband & Mobility Solutions businesses follows a review process
undertaken by our management team and Board of Directors, together with
“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
Brown went on to say, “Our priorities have not changed with
today’s announcement. We remain committed to improving the performance of our
Mobile Devices business by delivering compelling products that meet the needs
of customers and consumers around the world.”
Motorola says that the creation of the two stand-alone
businesses is expected to be completed as a tax-free distribution to Motorola
shareholders. The deal is subject to further financial, tax and legal analysis
and shareholders would end up holding shares of two independent publically
The transition is pending the implementation of
inter-company agreements, filing of documents with the SEC and a ruling on the
tax-free nature of the arrangement by the IRS.