Motorola has announced that it is separating its struggling mobile phone business from the rest of its operations. The move, which is not expected to be completed until next year, will create two standalone companies.
Motorola has come under increasing pressure from disgruntled shareholders – led by billionaire investor Carl Icahn – to re-evaluate its mobile phone strategy after the division reported losses of $388m (£194m) in its fourth quarter.
The decision was taken following a management review overseen by chief executive Greg Brown. It has already led to the departure of chief marketing officer Kenneth “Casey” Keller after his role was axed. Brown says the company “remains committed” to improving the performance of its mobile business.
The split has been welcomed by analysts, although some believe it will result in job losses and a smaller Motorola when it relaunches next year.
Ovum mobile director Martin Garner says: “This will be a big relief for Motorola investors. It promises a new start for the very troubled handset division but it does not solve its problems.
“To make it work, Motorola must provide a period of management stability and focused, heads down, new product development. The company split does not provide a short-term fix for the underlying cause of the problems – the weak handset portfolio. Improving that is a long, hard process.”
It is thought that several rivals, including Nokia and Sony Ericsson, rejected the chance to buy Motorola’s handset business.