Icahn Do Better Forces Motorola Phone Split

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Troubled US phone group Motorola is set to hive off their mobile phone division into a separate operation with the Company indicating that it had no quick fix in sight for its money-losing handset division. During the past 3 months Motorola has openly touted the sale of their phone division to several Asian vendors and all have said no.

Not helping the process was the failed acquisition of Siemens Mobile by BenQ in 2006.

Motorola, which gave into demands by activist investor Carl Icahn, saw its shares rise 26 cents to $10.02 claims Reuters.
“It could be 18 months before it happens, by which time the outlook for either of the businesses could be completely different,” said London-based Nomura analyst Richard Windsor, who had hoped such a deal could be done this year.

Icahn said Wednesday afternoon he would still pursue his proxy battle with Motorola unless it agreed to have Keith Meister, chairman of Icahn Enterprises and manager of Icahn’s $8 billion fund, on the board. He said the break-up was overdue and questioned why it would not be accomplished until 2009.


Motorola plans to create two publicly traded companies, separating its mobile phone unit from the rest of the business, which makes television set-top boxes and network equipment.


Some analysts see the split helping Motorola negotiate a joint venture or a sale for the cell phone business, but others fear that its top talent could leave amid the uncertainty.”Folks know it’s going to take a while and the next couple of quarters is going to be tough,” said American Technology Research analyst Mark McKechnie.

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