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Motorola Announces Spin-Off of Struggling Handset Business

6:30 am on March 29, 2008 | Category: Business, Cell Phones, Corporate

American mobile phone and telecom equipment giant, Motorola Inc., announced this week that it plans to spin off its struggling handset division as an independent, publicly-traded company.

“Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and board of directors, together with independent advisors,” said Motorola president and CEO, Greg Brown, in a statement.

This follows Motorola’s January 31 announcement that it was studying a possible breakup in order “to recapture global market leadership” in the handset industry while enhancing value for its shareholders.

Motorola was, until quite recently, the world’s second largest mobile phone manufacturer after Finland’s Nokia Corp., but has now fallen behind South Korean rival, Samsung Electronics Corp. and continues to lose market share under its current corporate structure.

“Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus — as well as more targeted investment opportunities for our shareholders,” Brown said.

Motorola expects to make the split official sometime next year, after implementing inter-company agreements, filing documents with the Securities and Exchange Commission, and obtaining an Internal Revenue Service ruling as to the tax-free nature of the proposed restructuring.

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