Motorola (NYSE:MOT) officially divided into two, publicly traded companies, Motorola Mobility and Motorola Solutions, bringing to fruition a breakup that was three years in the making.
Motorola Mobility CEO Sanjay Jha, who has brought the company back to relevance thanks to his reliance on Google's (NASDAQ:GOOG) Android platform, will lead the mobile devices and set-top box units, while Greg Brown will head Motorola Solutions, comprised of the enterprise mobility and iDEN network units. Mobility will trade under the ticker "MMI" and Solutions will trade as "MSI."
Both of the companies will compete for corporate customers, which could cause some tension. However, the Mobility business is well positioned to capitalize on the momentum Motorola has built this year in its handset business. It also will benefit from an infusion of several billion dollars and the elimination of its debt, actions completed before the split.
Difficulties still remain for Jha though. Motorola has relied heavily on Verizon Wireless (NYSE:VZ) for its U.S. sales, and is now looking to diversify its customer base. Steve Elfman, Sprint Nextel's (NYSE:S) president of network operations and wholesale, told the Wall Street Journal that Motorola is "going to be an important part of our 3G/4G portfolio, certainly in the next couple of years."
Jha said in December that Verizon's competitive actions in the first quarter of next year could have "an impact" on Motorola's financial results during the period. Although Jha did not provide additional financial specifics, he said Motorola is working to minimize the problem by expanding its Android smartphone distribution with additional U.S. carriers including AT&T Mobility (NYSE:T), Sprint and T-Mobile USA. Verizon is widely expected to begin selling the Apple (NASDAQ:AAPL) iPhone early this year.
Jha told the Journal that the company, which produced 23 smartphones in 2010, will focus on a smaller, more high-end lineup this year, in addition to producing an Android-based tablet. Interestingly, Jha said that by the second half of the year, most of Motorola's high-end products will be geared toward 4G networks.
In addition to fending off a potential Verizon iPhone, Jha also will have to contend with Samsung, HTC and other heavy-hitting Android phone makers.
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Barron's blog post
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