Motorola to Break Into 2 Companies

The suburban Chicago-based cell phone maker has been under pressure from billionaire investor Carl Icahn for changes meant revitalize its cell-phone business. The cell phone unit has seen its sales and stock price plummet with the company unable to produce second act to the once-popular Razr phone.

Motorola said the handset business will operate separately from another company that will encompass its home and networks business, which sells TV set-top boxes and modems, and its enterprise mobility solutions, which sells computing and communications equipment to businesses.

"Our priorities have not changed with today's announcement," Chief Executive Greg Brown said in a statement. "We remain committed to improving the performance of our Mobile Devices business by delivering compelling products that meet the needs of customers and consumers around the world."

Schaumburg-based Motorola said it hopes the transaction will be tax-free, allowing shareholders to own stock in both of the new companies. If the deal is approved, the two units would be separated in 2009.

Brown said Motorola will launch a search for a new chief executive of the Mobile Device business as it works to regain favor with customers and its No. 2 position in the cell phone market.

Motorola lost that spot last year to rival Samsung Electronics Co.

Finland's Nokia Corp. is the industry leader.

"We believe strongly in our brand, our people and our intellectual property, and expect that the Mobile Devices business will be well-positioned to regain market leadership as a focused, independent company," Brown said.

A message left with Icahn's office was not immediately returned.

Motorola shares climbed 66 cents, or 6.8 percent, to $10.42 in premarket trading.

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