Motorola has confirmed earlier speculation that it will split into two seperate companies, with the handset business operating independently of the networking business.
CEO and president Greg Brown says: "Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and board of directors, together with independent advisers."
The handset operations have been troubled for some time, having posted huge losses last year and losing the second-placed market spot to Samsung.
Gartner research vice-presenident Leif-Olof Wallin comments: "This move is a natural extension of the announcement two months ago that Motorola is looking for options when it comes to the mobile phone business.
"Gartner's interpretation is that initial talks with possible candidates have not progressed as wished and separating out the mobile devices business into a separate entity is a logical next step – a step that would have needed to happen anyway once the decision to divest was made.
" The next step will be to look for buyers outside the handset business, including private equity, to spin out the handset Newco or possibly IPO it. Over the past years, we've seen virtually all western device manufacturers, except Nokia, divest their handset business (Alcatel, Phillips, Siemens with JVs/divestitures and Ericsson with a joint venture with Sony).
"It looks like none of the other handset vendors have showed sufficient interest in acquiring Motorola¹s handset business which indicates that the divestiture might take some time.
"During this time, the handset unit will be under considerable stress with lots of inward-looking activities taking time and focus away from products, sales and marketing which might further fuel a negative spiral. Competitors – most notably Samsung, Nokia and LG – will probably gain the most during this period."