Under Pressure, Motorola Breaks Itself Into Two Companies - InformationWeek

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Under Pressure, Motorola Breaks Itself Into Two Companies

The company will split itself into two units in 2009, one to handle mobile phones and the other to handle just about everything else.

Galvin was replaced in 2003 by Ed Zander, a former president of Sun Microsystems with a strong background in computers but not in the finer points of communications markets. Galvin left behind a design for a handset called the Razr, which rejuvenated sales and profits at Motorola for a while for Zander.

But the company never came up with another hit like the Razr, and the situation deteriorated for Zander. Then Icahn aggressively appeared on the scene, narrowly losing a proxy battle last May when Zander promised to revive the handset operation with a barrage of new cell phones. For the most part, the phones didn't catch on in the face of tough competition from foreign makers such as Nokia and Samsung.

Then Zander came under fire -- the stock analysts again, now joined by an increasingly bellicose Icahn -- until he was replaced last December by Brown, who has a telecom industry background. The management exodus and lackluster handset acceptance have continued under Brown, who needs time to develop and insert new offerings in the product food chain.

Wednesday morning, Brown said Motorola will seek to take advantage of the company's strong brand name. In the future, he said, the company will emphasize its product development. He also is moving to staunch the exodus of key engineers and executives.

The move to break out the Mobile Devices operation is particularly painful for the once-proud company, because it had pioneered the mobile phone business in the first place.

The proposed split isn't unprecedented at Motorola, either: The company spun off its Freescale Semiconductor operation in 2003 and recently was reported to be in serious talks with Nortel Networks about merging their respective wireless infrastructure units with Nortel to operate a merged unit.

The Mobile Devices unit delivers multimode, multiband communications products and technologies, and designs, makes, and sells mobile handsets and accessories.

Broadband & Mobility Solutions designs, integrates, and manufactures voice and data communications systems and wireless broadband networks for enterprises, government, and public-safety users.

Shortly after the announcement, Motorola released a barrage of product and service announcements that cover Mobile WiMax and Long Term Evolution to mobile TV devices and femtocells.

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