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Feb. 3, 2008

On Friday, Motorola said it was considering spinning off its mobile phone unit, saying it is looking into structural and strategic realignment.

Since mid-2007, the U.S.-based handset maker has been struggling to regain profitability and has been losing market share to many of its rivals.

Some wireless industry analysts have speculated that possible candidates to purchase Motorola's handset unit include rivals Samsung, Sony Ericsson or even Chinese vendor Huawei.

Activist investor Carl Icahn, who owns a 3.3 percent stake in the company, has called for the company to spin off its handset unit to increase value for its shareholders.

Icahn said in a statement "for many months I have been publicly advocating the separation of Mobile Devices from Motorola's other businesses and I am pleased to see that the company is finally exploring that proposal."

Some industry observers say that selling off the handset business wouldn't make long-term sense for investors.

Motorola's handset revenues dropped by about 34 percent during 2007 and mobile phones still accounted for about 53 percent of the company's total sales.

The handset manufacturer has done some strategic realigning last year, ousting its CEO and redistributing resources amid three business segments.

In 2007, the company's TV set-top box and network equipment unit saw a 9 percent increase in sales and its enterprise mobility unit, which sells wireless products to corporate clients, reported sales increases of 43 percent.

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Source: Motorola.

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