Motorola To Split Into Two Companies

In a slight change of direction, Motorola Inc. is moving forward with a plan to separate the company into two independent, publicly-held entities. One will include the company's mobile devices and home businesses. The other will include its enterprise mobility solutions and networks businesses. Sanjay Jha, co-chief executive officer of Motorola, will serve as chief executive of Motorola's mobile devices and home businesses effective immediately. Greg Brown, co-chief executive officer of Motorola, will serve as chief executive officer of Motorola's enterprise mobility solutions and networks businesses effective immediately. This is a change in strategy. For some time, there has been talk about breaking the company into two. Company executives said they were making progress in efforts to revamp the mobile handset division, although its planned spin-off as an independent business was placed on hold. Motorola intends to effect the separation through a tax-free stock dividend of shares in the new company to shareholders. Motorola's share of global cell-phone shipments has been sliding over the past three years, iSuppli noted. The company accounted for 5.4 percent of worldwide unit shipments in the second quarter of 2009, down from 22.5 percent in the second quarter of 2006, according to the research firm. Motorola ranked No. 5 in worldwide handset market share in the third quarter of 2009, iSuppli said. The company ranked No. 2 as recently as the first quarter of 2007. Motorola hasn't had a hit handset product since its popular Razr, launched in 2003. Motorola's latest cell phone, Droid, includes hardware similar to other so-called "iPhone killers." Recently, Motorola sold its Europe, the Middle East and Africa (EMEA) EuroDocsis consumer premise equipment business to Compal Electronics Inc., a Taiwan-based manufacturer of computer notebooks. Motorola recently recorded a small profit in the fourth quarter buoyed by improving margins and a sharp decrease in special charges that pushed the company into a multi-billion dollar loss in the final quarter of 2008. The company said it earned $142 million, or 6 cents per share, in the three months ended Dec. 31, compared with net loss of $3.7 billion, or $1.61 per share, in the comparable year-ago quarter. Revenue continued to drop, however, plunging 20 percent to $5.7 billion from $7.1 billion in the fourth quarter of 2008. For the entire year, Motorola recorded a net loss of $51 million compared with net loss of $4.2 billion for 2008. Sales in 2009 fell to $22 billion from $30 billion in the immediately preceding year.