Report: Motorola may spin off handsets with set-top box unit

Reversing course, Motorola is considering spinning off the set-top box part of its home and networks mobility division along with its mobile devices division, according to a report in the Wall Street Journal.

The report, citing unnamed sources familiar with the matter, said that in recent days the company has decided to move away from shopping the entirety of its home and networks division, and will instead combine the set-top box portion with its handset division into a new, publicly traded company. The handset unit and the set-top box unit combined had about $11 billion in sales in 2009, or half of the company's total sales.

Meanwhile, the company will move forward with an auction of the unit that makes networking equipment gear.

The decision, the report said, was made during a series of board meetings during late January. A Motorola spokeswoman declined to comment.

According to the report, Motorola now believes that combining the handset division with the set-top box unit will create a handset company differentiated from its rivals. According to a separate report in the New York Times, the thinking is that such a company could deliver content on multiple platforms--via TV, computers and handsets.

Motorola co-CEO Sanjay Jha has repeatedly said that the company will spin off its handset division when market conditions improve and the handset unit returns to profitability. During the company's fourth-quarter earnings conference call, he said the handset unit will be profitable by the fourth quarter of 2010. In the fourth quarter of 2009, Motorola's handset business suffered from a drop in sales, despite the introduction of new, high-end Android devices such as the Droid and Cliq during the period. Handset sales were $1.8 billion, down 22 percent from $2.35 billion in the fourth quarter of 2008.

In January, the WSJ reported that Motorola had put on hold its plans to sell its home and networks business, and was re-evaluating its plans.

For more:
- see this WSJ article (sub. req.)
- see this NYT article

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