Motorola finds breaking up hard to do
The Wall Street Journal is reporting that Motorola is running into roadblocks when it comes to trying to separate the company's mobile-phone division, a plan it announced in February. The biggest problem is the massive amount of debt that Motorola or the new independent company may have to incur since the mobile-phone business is losing so much money.
Another problem: Who in the world wants to run the division? Motorola has been trying to find someone to head the business since February 2007. Reportedly, the favorite candidate, Todd Bradley from HP, has withdrawn himself from consideration.
Even if Motorola can start turning around the mobile-phone division, which has lost $1.6 billion since year-end 2006, the business needs about $4 billion to support itself as an independent company, according to estimates from credit analysts. That is about half of what Motorola's total cash balance is expected to come in at by the end of 2008. That could mean that Motorola is left with a considerable amount of debt, which could significantly hurt the company's credit ratings despite the fact that the company's enterprise and mobility groups are performing well.
Certainly Motorola's handset division could try and find new funding, but where?
- check out the WSJ (sub. req.)