Motorola May Disconnect Phone

The wireless giant explores the sale or spinoff of its ailing mobile-device business.
Publish date:

Updated from 5:25 p.m. EST



says it is exploring the possible spinoff of its ailing mobile phone business.

The Schaumburg, Ill., wireless tech giant is mulling strategic alternatives for the handset unit, which has lost market share to rivals


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, helping to plunge the company into red ink.

"We are exploring ways in which our mobile devices business can accelerate its recovery and retain and attract talent while enabling our shareholders to realize the value of this great franchise," CEO Greg Brown said in a press release.

The move will be viewed as a victory for activist investor Carl Icahn, who in November called for the ouster of former CEO Ed Zander and a

breakup of the company.

Icahn, in a statement after the announcement, said he is "pleased" that Motorola is exploring a sales of the mobile device division.

"However, we have previously informed Motorola that we expect to run a slate of directors for the upcoming annual meeting and this announcement by Motorola will not deter us from that effort -- we believe Motorola is finally moving in the right direction but certainly still has a long way to go," he added.

Brown, previously Motorola's operating chief, took over late last year after Zander vacated the top spot. But since then Motorola failed to introduce any compelling phones at recent industry shows that would give investors hope that a recent sales swoon was over.

If Motorola were to seek a buyer for its phone unit, it would leave the company with a cable set-top box operation, a wireless networking infrastructure business and a security and government services venture.

Overseas buyers may be interested in Motorola for its No. 3 status in the phone world and its heavy concentration in the U.S., where partnerships with phone companies are difficult to create.

But pessimists fear that Motorola may not fetch as much value as some investors may hope.

"Don't believe the hype," says one hedge fund manager. "Motorola is




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PCs in a


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world of commoditization -- behind the curve."

The news that Motorola may be exiting the phone business comes amid an

invasion of tech device makers like


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into the mobile phone market.

Shares of Motorola surged 10.7% to $12.73 in after-hours trading Thursday.