Motorola (NYSE:MOT) will split into two companies--called Motorola Solutions and Motorola Mobility--early next year, according to initial breakup plans the company filed with the Securities and Exchange Commission.
As expected, Motorola co-CEO Greg Brown will lead the Solutions company, which will include Motorola's enterprise mobility and network infrastructure units, and co-CEO Sanjay Jha will lead the Mobility company, made up of Motorola's handset unit and set-top box division. The names of the companies were mentioned in a recent Wall Street Journal article about Motorola's breakup plans. The company still plans to make the split in first quarter 2011.
Motorola has formed a subsidiary, called Motorola SpinCo, which will be a holding company for Motorola Mobility. Jha has not yet decided whether to move the handset company out of the Chicago area, where Motorola has been based for decades. Motorola Mobility will have more than 20,000 employees. The units in the Mobility company posted a net loss of $1.3 billion in 2009 on $1.1 billion in revenue. According to a breakdown of revenue by customer, Verizon Wireless (NYSE:VZ) made up 17 percent of the company's revenue in 2009, and Sprint Nextel (NYSE:S) made up 13 percent of revenue.
Additionally, the company's filing said Motorola will be licensing logos and trade names from Motorola SpinCo, which "could result in product and market confusion," the filing said.
According to the recent Journal article, Motorola plans to divert a large portion of its cash to its handset division after the split. The report, citing unnamed sources familiar with the matter, said Motorola will buy back most of its debt and divert a substantial part of its remaining cash--around $3 billion to $4 billion--to allow the loss-making handset business to emerge stronger financially.
For more:
- see this release
- see this Chicago Tribune article
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