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31 Mar 2008
Telecommunications behemoth Motorola has announced it plans to split into two publicly traded companies.
The company has begun the process of separating its Mobile Devices division from it Broadband and Mobility Solutions division. The Mobile Devices business will be purely focused on mobile handsets, accessories and software.
The Broadband and Mobility arm will incorporate Motorola’s Enterprise Mobility, Government and Public Safety and Home and Networks businesses and will deal with voice and data products and wireless broadband networks aimed at the enterprise market.
Further reading
Motorola announced in January that it would be undertaking an evaluation of its structure and president Greg Brown said: "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 independent advisors.
“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.”
Motorola indicated that it plans to begin tax free distribution to shareholders, who would then hold shares of two independent and publicly-traded companies. The process is expected to take place next year, although the company counselled that it could give no guarantees of when or if the separation would take place.
Motorola has come in for criticism for not building on its success in the handset market and failing to produce a worthy successor to its enormously successful Razr model. In the 2007 ranking of best global brands by magazine BusinessWeek and brand consultancy firm Interbrand, Motorola was ranked 77th, way behind rivals Nokia, who was fifth, and Samsung, who was 21st.
The vendor encountered further negative publicity this week when former senior advisor Numair Faraz published a vitriolic open letter to the company on technology news website Engadget criticising the actions of Brown and former president Ed Zander. Faraz claimed he took Motorola's plight personally and implored the company to redouble its efforts to produce a handset that could enjoy the same level of success as the Razr.
Brown added: “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.
"As part of that effort we have undertaken a global search for a new chief executive officer for the Mobile Devices business. We believe strongly in our brand, our people and our intellectual property and expect that the Mobile Devices business will be well-positioned to regain market leadership as a focused, independent company.”
Motorola declined to comment on how the split might affect the company's partners and channel strategy.
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