Motorola Details New Plan To Split Into Two Companies

Motorola announced a revised plan to break itself up, aiming to split into two separate companies by the first quarter of 2011: one that will merge mobile devices and the cable-oriented Home business, and the other comprising its wireless networking and enterprise units.

The new plan, announced Thursday, will create two independent, publicly traded entities. The strategy comes after Motorola reportedly had been attempting to sell the Home & Networks Mobility unit, and follows its 2008 announcement that it would spin off the handset business.

Sanjay Jha, currently co-CEO of Motorola heading up the Mobile Devices division, will serve as CEO of Motorola's Mobile Devices and Home businesses effective immediately. The newly reorganized Mobile Devices and Home business will offer mobile converged devices, digital set-top boxes, and video, voice and data solutions.

"The combination of Mobile Devices and our Home business brings together two highly complementary and innovative organizations," Jha said in a statement. "Together we will be best positioned to lead in the convergence of mobility, media, and the Internet. Our expanding portfolio of smartphones and end-to-end video content delivery capabilities will enable us to provide advanced mobile media solutions and multi-screen experiences for our customers."

Greg Brown, Motorola's other co-CEO, will become CEO of the Enterprise Mobility Solutions and Networks businesses effective immediately. That business combines Motorola's two-way radios, mobile computers, secure public safety systems, scanning, RFID, and wireless network infrastructure businesses.

According to Motorola, the Enterprise Mobility Solutions and Networks company will assume the current company's outstanding debt, which is expected to be approximately $3.3 billion at the time of the separation next year.

With the reorganization, it was not immediately clear what role Dan Moloney, currently president of the Horsham, Pa.-based Home & Networks Mobility group, will play. Motorola created that group in 2007.

Following the split, both entities will use the Motorola brand. The Mobile Devices and Home business is expected to own the Motorola brand and license it royalty free to the Enterprise Mobility Solutions and Networks business. "Additional details regarding brand, capital structure and which entity will be distributed will be provided in the future as we progress with our plans," Motorola said.

Motorola chairman David Dorman commented, "The board of directors supports the planned separation of Motorola into two industry-leading public companies. We believe this structure provides significant operational and strategic flexibility for both companies, positions them for future success, and enhances long-term shareholder value."

Motorola said it intends to effect the separation through a tax-free stock dividend of shares in the new company to Motorola shareholders.

In addition to the split, the company reportedly is considering attempting to sell the wireless-networking equipment unit, which sells voice and data gear to mobile carriers, the Wall Street Journal and The New York Timesreported Wednesday.