* One company to focus on cellphone, set-top box biz
* Other will focus on enterprise, wireless networking
* Analysts say the decision removes uncertainty
* Shares rise 2.3 pct
(Adds background on revenue, company and analyst comments,
By Ritsuko Ando
NEW YORK, Feb 11 Motorola Inc MOT.N said it
aims to split into two companies in the first quarter of 2011,
one to focus on cellphones and television set-top boxes, and
the other on enterprise networking.
Motorola said on Thursday that splitting into two
independent and publicly traded companies would help improve
its position in the different markets.
Motorola shares rose 2.3 percent to $6.80 in extended trade
after the news, which followed months of speculation over what
steps management would take to revive its business.
The company's money-losing mobile devices unit has been
struggling to compete with new smartphones, and has not had a
blockbuster since the Razr, although its Droid phone generated
some buzz since launching late last year.
Its set-top box business had also suffered due to a weak
economy, while its wireless network equipment business had been
hit by a consolidation among telecom operators.
"It's hard to work with a company when you don't know where
they'll be a year from now. So this removes uncertainty,"
Broadpoint Gleacher analyst Mark McKechnie said of Thursday's
announcement. "I do think the smaller divisions can offer some
operational efficiency and focus."
Motorola's latest financial results show its mobile phone
business had revenue of $7 billion for 2009. The enterprise
wireless business had revenue of $2 billion while home and
network sales brought in another $2 billion.
"We believe that as independent companies each business
will be best positioned to successfully pursue the respective
strategies and opportunities for growth," said Greg Brown, who
was co-chief executive officer of Motorola and will now become
CEO of the enterprise mobility and networking business.
Sanjay Jha, the company's other CEO, will head the mobile
devices and home business, it said.
Motorola said the move will take effect through a tax-free
stock dividend of shares in the new company. Its enterprise and
network equipment business will be the entity responsible for
Motorola's current public debt and will be capitalized to
achieve an investment grade rating, it said.
Both companies will use the Motorola brand. Additional
details including the capital structure of the companies will
be announced later, it said.
Jha said that the combination of businesses dealing with
mobile phones, cable set-top boxes and other home entertainment
devices was ideal to meet consumers' demands for "converged" or
seamless access to television, phone and Internet.
Motorola had previously said it would split its handset
unit from its other divisions, but executives also looked at
Motorola had tried to sell its networking division but a
source familiar with the matter recently said the process had
Tavis McCourt of Morgan Keegan said he was not sure whether
the combination of the handset and cable set-top box businesses
would yield synergies, but still saw the plan as positive.
"I'm glad they're doing it. It's nice they're putting
timing behind it. It's a sign they're very confident in their
handset business this year," he said.
The company reiterated that it planned to make the mobile
device business profitable in 2010.
(Reporting by Ritsuko Ando and Sinead Carew; Editing by Gary
Hill and Richard Chang)