| |
| |
![]() |
| |
|
| |
|
| |
|
NEW YORK : Motorola announced on Wednesday it would split into two independent, publicly traded companies in an effort by the struggling telecom and wireless firm to regain market leadership.
The moves comes as the Schaumburg, Illinois, company has come under pressure from billionaire investor Carl Icahn to take steps to boost shareholder value.
The move will split its Mobile Devices division, which has been lagging in the market for handsets and other mobile phones, and its Broadband & Mobility unit, which makes wireless modems, TV set-top boxes and other equipment.
"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 chief executive and president Greg Brown said in a statement.
The separation is expected to take the form of a tax-free distribution to Motorola's shareholders, who would then own shares of two independent groups, Motorola said.
The company had announced on January 31 that it was studying a possible break-up in an effort "to recapture global market leadership" in the mobile phone market and enhance shareholder value.
Motorola, once the world's second-largest mobile phone maker, after Nokia Corp. of Finland, has since lost its place to South Korean rival Samsung Electronics Corp. amid fierce global competition and watched its earnings slide.
The launch of Apple's iPhone and other smart phones has also put pressure on Motorola to revamp its product line.
The company lost 49 million dollars in 2007, swinging to a deficit after a profit of 3.6 billion dollars in 2006 as its problems worsened in the tough market for mobile devices.
Motorola said it expects the split to take place in 2009 after legal and regulatory reviews.
Shareholders, notably Icahn, have been pushing the company to spin off the mobile devices business to make it more profitable.
As part of his proxy battle to win four seats on the company's board, Icahn filed suit against Motorola on Monday to force to company to disclose documents about the mobile devices unit.
Analysts generally viewed the announcement as a positive development for Motorola, saying it may allow the company to strengthen the mobile devices unit and make it more profitable.
"This is probably the best news we have heard coming from Motorola in quite a while," independent analyst Jeff Kagan said.
"Will it save Motorola? Will Motorola become a vibrant and successful competitor again? These are questions we will not have an answer to for the next few years. However the announcement made today is a very good start."
A note from brokerage Morgan Keegan, which rates Motorola at market perform, called the decision "a clear positive," and said the spin-off will make it easier for Motorola's mobile devices business to attract talent and execute its turnaround.
Cowen and Co., which maintained an outperform rating for the company, said the spin-off is promising since it allows the company to find new leadership for the failing handset business, which would be "essential" to rebuilding the unit.
"In order to attract the very best talent to run the turnaround, Motorola needs to be able to offer the promise of running an independent company to tier-1 candidates," the firm said.
Motorola shares rose 0.9 percent on the news to 9.85 dollars - roughly half the level of its recent highs at 19.34 dollars last October. - AFP/ch/de
|
