Motorola to split into two companies – mobile devices, and broadband and mobility solutions

26 March 2008

The troubled Motorola, Inc., under pressure from billionaire financier Carl Icahn's hostile moves, has announced that it will split into two independent, publicly-traded companies. The split will create a mobile devices company and another controlling Motorola's broadband and mobility solutions operations, which include its network equipment, enterprise and public safety businesses.

Motorola, which registered a loss of $49 million in 2007 after a $3.66 billion profit in the previous year, has been the target of an escalating proxy battle launched by Icahn. Icahn is the company's second-largest shareholder.

The company's share of the mobile handset market has been on the decline, and it has slipped to number three worldwide behind Finland's Nokia and Korea's Samsung Electronics. And this has been the main cause of its troubles, including Icahn, who has been demanding that Motorola sell off its mobile devices operations.

The company says the split will take the form of a tax-free distribution to Motorola's shareholders, subject to further financial, tax and legal analysis, resulting in shareholders holding shares of two independent and publicly-traded companies and is expected to be completed in 2009.

According to the company, the creation of two companies would enhance flexibility, sharpen focus and give shareholders better targeted investment opportunities. The company is said to have launched a global search for a new CEO for the mobile devices business.

In January end, Motorola had announced that it was conducting a strategic review of its business leading to a separation of the mobile handset business. (See: Motorola mulls restructuring; may split operations)