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Motorola Split: Red Flag Or Green Light?

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Mar 26, 2008 

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Sarah Novotny  |

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Motorola Split: Red Flag Or Green Light?

ADOTAS – Today, Motorola announced that it would be splitting into two publicly traded companies to separate its handset division (which has been suffering major losses) from its other businesses. Shares of the firm have gone up now about 5%.

This effort comes in the midst of a proxy battle with activist investor Carl Icahn, reports Reuters. The firm has said that the handset division has lost market share to rivals such as Nokia and Samsung and that the split may help the company find a strategic investor.

Avian Securities analyst Tero Kuittinen said to Reuters, “I suspect it’s a prelude for a joint venture for the mobile devices business.” Thoughts of either a Japanese or Chinese company as the top possible investors were expressed as well. Kuittinen continued “It might be easier to negotiate with a standalone unit. It’s positive news because it shows the company is moving toward a serious restructuring.”

This news also comes at a time where frenzied excitement over the mobile market has been widely reported. Many firms are scrambling to get more shares of wireless spectrum and several firms are coming out with improved technology for mobile compatible content and advertising, yet one of the most prominent names in the US mobile market has suffered enough of a loss to divide its business.

Motorola is currently ranked third in the global handset market. The firm is already looking for a new head for its mobile technology business. Greg Brown, CEO for Motorola said “We expect this action to enhance recovery in mobile devices and accelerate efforts to attract a new leader.”

The move could be a red flag or a green light for Motorola and the potential reality of the future of mobile marketing.

Tags: handsets, Mobile-Marketing, Motorola and technology

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