Motorola, the grand old company of communications equipment, will begin the new stock trading year as two companies, Motorola Solutions and Motorola Mobility. The breakup has been in the works for more than two-and-a-half years as the once dominant communications equipment provider has faded.
The announcement of the Jan. 4 separation date came Wednesday. Greg Brown will remain CEO of Motorola Solutions, which includes the company's public safety, bar-code scanners, walkie-talkies and related equipment. Sanjay Jha will continue as CEO of Motorola Mobility, which makes mobile phones and set top boxes.
"Today's announcement marks another important milestone toward the upcoming separation that is expected to benefit Motorola, its stockholders, as well as each company's respective customers and employees," said Brown and Jha in a joint statement. "We look forward to taking advantage of the opportunities before us as we begin the new year as two independent, publically traded companies."
Investors responded to the announcement by driving Motorola stock up 7% in early trading Wednesday. Two classes of stock will be distributed to shareholders of record on the close of business Dec. 21.
The company has been melting down for years. In 2004, its Semiconductor Products Sector was divested as Freescale Semiconductor for about $5 billion. Earlier this year, Motorola agreed to sell its network equipment division to Nokia Siemens Networks for $1.2 billion in a deal that is expected to close by the end of the year.
Motorola practically invented the mobile phone and dominated the category for years, but has watched its market share dwindle to single digits. Jha was brought in from Qualcomm to staunch the bleeding and has recorded some success with Motorola's Android platform phones.
Constant management turmoil in recent years coupled with declining revenues and profits attracted Wall Street financier-raider Carl Icahn, who, arguing that the company was worth more broken up than whole, placed two directors on the Motorola board.
The company was founded in the 1920s by two Galvin brothers, Paul and Joseph; the Galvin family held top management positions into 2003 when chairman Chris Galvin left under intense fire from stock analysts. Chris Galvin left his successor Ed Zander with one last "hit" phone, the RAZR, but it wasn't enough to stem the growing tide of red ink.