Motorola Inc. said it would split into two publicly traded companies by the first quarter of next year as it looks to reinvigorate its disparate businesses.
The Schaumburg, Ill., company has long sought a break up, but more recently shifted its existing plans. Motorola will now group together its mobile devices unit with the home division, which makes television set-top boxes, placing them under co-Chief Executive Sanjay Jha. Fellow co-CEO Greg Brown would oversee the enterprise mobility and networks businesses, which make two-way radios and wireless networking gear, respectively.
The last-minute change in game plan was reported by The Wall Street Journal on Wednesday.
Investors, including billionaire activist shareholder Carl Icahn, have long pushed for a break-up of Motorola, since there are few natural connections between the various divisions. Further shake-ups may be in store; the Wall Street Journal said the wireless network equipment business may be auctioned off.
The separation plan comes as the company looks to turn around its various flagging units. The higher-profile mobile devices unit has shown some signs of life with the success of its Droid smart phone. The various other business continue to see declines as a result of dampened consumer and government spending.
The break-up will occur as a tax-free dividend of shares in a new company to existing Motorola shareholders. The enteprise mobility and networks business will assume the debt. Both companies will use the Motorola name; Mr. Jha's company will own the brand, and license it out for use by Mr. Brown's business.
Motorola shares rose 4.2% to $6.93 in after-hours trading.
The Schaumburg, Ill., company has long sought a break up, but more recently shifted its existing plans. Motorola will now group together its mobile devices unit with the home division, which makes television set-top boxes, placing them under co-Chief Executive Sanjay Jha. Fellow co-CEO Greg Brown would oversee the enterprise mobility and networks businesses, which make two-way radios and wireless networking gear, respectively.
The last-minute change in game plan was reported by The Wall Street Journal on Wednesday.
Investors, including billionaire activist shareholder Carl Icahn, have long pushed for a break-up of Motorola, since there are few natural connections between the various divisions. Further shake-ups may be in store; the Wall Street Journal said the wireless network equipment business may be auctioned off.
The separation plan comes as the company looks to turn around its various flagging units. The higher-profile mobile devices unit has shown some signs of life with the success of its Droid smart phone. The various other business continue to see declines as a result of dampened consumer and government spending.
The break-up will occur as a tax-free dividend of shares in a new company to existing Motorola shareholders. The enteprise mobility and networks business will assume the debt. Both companies will use the Motorola name; Mr. Jha's company will own the brand, and license it out for use by Mr. Brown's business.
Motorola shares rose 4.2% to $6.93 in after-hours trading.
