Did the gadfly split Motorola in two?


Did the gadfly split Motorola in two?

His reputation preceded him: activist investor Carl Icahn seems to have succeeded in breaking Motorola in two--even without appointing any of the four nominees he's been looking to install on Motorola's board of directors. While many will credit Icahn with the spin-off, Motorola CEO Greg Brown stressed on a conference call that today's decision had little to do with their very own gadfly.

The broad strokes of Motorola's strategy are simply to spin-off the handset business to create two independent and publicly traded companies: Mobile Devices and Broadband & Mobility Solutions, which describes the enterprise business and the home networking business. Brown said the hunt is still on for a handset unit head, but now the position will come with a CEO title. Motorola plans to make the move some time in 2009, and the spin-out will take the form of a tax-free distribution to shareholders.

Nearly every other detail about the strategy remains unannounced and possibly undecided. Will both companies' retain the Motorola brand? Brown assured callers on the investors' conference call today that he "clearly recognize[s] the importance of Motorola's brand for both companies" and that issues about branding are among those unresolved. While it's difficult to imagine the handset business losing the Motorola brand, Brown noted that the brand is also trusted on the networking and enterprise side, too. Other unresolved issues include intellectual property rights as well as shared services and systems.

By halving the company, Motorola believes the two companies will each benefit from renewed management focus and a better capital structure. Two ingredients that could help "enhance the pace of recovery in mobile devices," Brown said.

While the split may help clear the clutter from Brown's desk in 2009, leading the recovery of the newly independent handset business will be no cake walk. Success in the handset business requires good handsets. Brown admitted as much: "It will be a product-led recovery, but it will take through 2008 and into 2009." -Brian

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