Motorola to split mobile phone unit into separate business

Motorola bowed to pressure from investors and announced a plan to split its struggling mobile phone business from other operations to form two separate, publicly traded companies, an Associated Press report said.

The announcement wasn't surprising and comes after a second year of agitation from billionaire investor Carl Icahn, who has become increasingly frustrated with Motorola's eroding phone sales.

Executives, quoted by the report, said the move will allow the two companies to focus better on their respective strengths and weaknesses, while accelerating the turnaround plan for the mobile phone unit, which has seen its fortunes slip after trend-conscious customers lost interest in the Razr flip phone.

'The creation of the two independent, publicly traded companies provides improved management focus and a capital structure that's more tailored to the individual business needs,' said CEO Greg Brown, who will remain at the helm of the split company's non-mobile phone unit. 'And it will provide some improved alignment and agility and will help us going forward.'

Specifics of the deal haven't been disclosed, but Motorola said its handset business will operate separately from another company offering its TV set-top boxes and modems and its computing and communications equipment, the Associated Press report added.

Motorola stated that it expects the transaction will be tax-free, allowing shareholders to own stock in both of the new companies. If the deal is approved by regulators, the two units would be separated in 2009, the report concluded.