Motorola announced today the company will split into two publicly traded companies, one handling handsets and accessories and the other taking on wireless broadband networks and enterprise-level communications services.
Investor Carl Icahn has been pressuring the company to separate its mobile phone business. Motorola offered two board seats to Icahn this week, but the activist investor rejected the offer.
CEO Greg Brown said in the news release, “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 shareholders.”
The Mobile Devices business will handle the designs, manufacturing, and sales of mobile handsets and accessories, and will license a portfolio of intellectual property.
The Broadband & Mobility Solutions business will handle voice and data communication solutions and wireless broadband networks for enterprises and governments. It will also handle IP video, cellular, and high-speed broadband network infrastructure, and cable set-top receivers.
Brown said a search for a chief executive for Mobile Devices is under way. “We expect this action to enhance recovery in mobile devices and accelerate efforts to attract a new leader,” Chief Executive Greg Brown said on a conference call with analysts.
It’s not yet clear what revisions to his strategy Icahn might make now that Motorola has agreed to the split he requested.
One consequence of the separation: the newly separated unit may now find it easier to partner with another mobile-devices company to help it regain market share and operate more efficiently, says C/Net.
Motorola is at risk of sinking further in global phone sales rankings, from No. 3 to No. 4., says Forbes Magazine.
- No. 1- Nokia is expected to ship more than 500 million phones this year.
- No. 2 – Samsung is expected to ship less than half of Nokia and claims 14% of the market.
- No. 3 – Motorola has lost half its global market share in the last year or so
- No. 4 – Sony Ericsson, a joint venture between Sony and Swedish phone maker Ericsson
- No. 5 – LG Electronics, moving up
No. 10 Apple, say analysts, is unlikely to vault into the top five anytime soon–even if Apple meets its oft-stated goal of selling 10 million iPhones in 2008.