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Business News/ Companies / Motorola to split into two by next year
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Motorola to split into two by next year

Motorola to split into two by next year

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Chicago: Motorola Inc Friday said it will split into two independent, publicly traded companies by the first quarter of 2011.

After the “planned separation", one company will include the mobile devices and home businesses, while the other would include Motorola’s enterprise mobility solutions and networks businesses.

“The board of directors support the planned separation of Motorola into two industry-leading public companies. We believe this structure provides significant operational and strategic flexibility for both the companies, positions them for future success and enhances long-term shareholder value," Motorola board chairman David Dorman said.

The Schaumburg, Illinois-based company’s co-chief executive officer Sanjay Jha would serve as CEO of the mobile devices and home businesses effective immediately.

The business will offer a comprehensive portfolio of mobile converged devices, digital entertainment devices in the home, end-to-end video, voice and data solutions.

“The combination of mobile devices and our home business brings together two highly complementary and innovative organisations.

Our expanding portfolio of smartphones and end-to-end video content delivery capabilities will enable us to provide advanced mobile media solutions and multi-screen experiences for our customers," Jha said.

Motorola had been planning the spin-off of the handset business in 2008, but plans were delayed due to recession.

For the new enterprise mobility solutions and networks businesses, Motorola Co-chief executive officer Greg Brown will serve as the CEO with immediate effect.

This business will offer a comprehensive portfolio of products and solutions, including rugged two-way radios, mobile computers, scanning and wireless network infrastructure.

The separation comes as the company looks to turn around its various flagging units.

The mobile division had nearly $7 billion sales in 2009, while the home division had about $4 billion sales.

Motorola intends to effect the separation through a tax- free stock dividend of shares in the new entity to its shareholders, the company said.

Following the separation, both businesses would be well capitalised so the companies can execute their respective business plans and address future opportunities, it added.

Motorola expects that post-separation, the enterprise mobility and networks business would be capitalised in a manner that will achieve an investment grade rating and will be the entity responsible for Motorola existing public market debt at the time of separation.

Following the separation, both entities will use the Motorola brand.

The mobile devices and home business is expected to own the Motorola brand and licence it royalty free to the enterprise mobility solutions and networks business.

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Published: 12 Feb 2010, 12:37 PM IST
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