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Motorola Splits In Response To Fractious Market Demands

January 4, 2011

Motorola Inc., the venerable creator of many radio and communications devices, announced its formal split into two companies today. This long-awaited split comes in response to the increasingly diverse markets it competes in.

Motorola Mobility, which will focus on building cell phones, is showing solid signs of improvement with $2.9 billion in sales announced for the most recent quarter. After struggling with no front running success to follow its acclaimed RAZR cell phone which debuted in 2004, Motorola is moving ahead by building the successful Droid smart phone which runs on Google’s Android software. Motorola’s Droid smart phones are a leading competitor to Apple’s iPhone.

Motorola Solutions will remain pointed to Motorola’s traditional market strengths of building barcode scanners, police radios, micro-computers and enterprise level communication equipment. Motorola Solutions will also continue to maintain its strong services business and innovative communications.

From broadband communications infrastructure, enterprise mobility and public safety solutions to high-definition video and mobile devices, Motorola is considered a leader in innovations that enable people, enterprises and governments to be more connected and more mobile.

In 2008, under pressure from activist investor Carl Icahn, Motorola set the breakup in motion, hiring Sanjay Jha, the chief operating officer of mobile chipmaker Qualcomm Inc., to strengthen its declining cell phone business. Although considered a risky move at the time, the new CEO quickly pointed the company towards a healthier market of providing robust smart phones to its product line. The breakup was originally slated for 2009, but Motorola postponed it due to market slowdowns.

In November, the company announced a definitive date for the long-planned split. Motorola shareholders of record on Dec. 21 will receive one share of Mobility for every eight shares of Motorola Inc. they already held. Motorola Inc. shares will then go through a 1-for-7 reverse split and become Motorola Solutions shares.

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