Motorola explores sale of its mobile device unit

Announcement follows a year of drooping phone sales

Motorola Inc. announced today that it is exploring a possible sale of its mobile device business "to recapture global market leadership and to enhance shareholder value."

The Schaumburg, Ill., communications technology maker described its move as an exploration of a "structural and strategic realignment of its businesses" and stressed "there can be no assurance any transaction will occur."

The company's alternatives "may include the separation of mobile devices from its other businesses," a company statement said.

Motorola CEO Greg Brown said in the statement that the company "is 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."

The announcement comes eight days after Motorola said its 2007 revenues hit $36.6 billion, a drop of 15% from the prior year. Mobile device sales were down by 33%, totaling $19 billion for the year.

When that report appeared on Jan. 23, Brown said his team was "working to get mobile devices back on track." Today's news makes the situation at Motorola seem even more dire.

If the company's mobile devices business were sold off, "it would really reduce Motorola's visibility worldwide," said Phillip Redman, an analyst at Gartner Inc. "If it's broke that bad, who could fix it?"

Motorola could find a strategic partner to handle development and sales of mobile devices, he said.

"A lot of it comes down to their software," he said. "Motorola needs to reassess its [software] development capabilities." Redman has criticized Motorola in the past for not being as nimble as rival device makers such as Nokia Corp. and for not being willing to bring in outside development teams to work on specific products.

Another analyst, Jack Gold at J.Gold Associates, said selling the mobile unit would be a "nonstarter" since it is the core of the company and brings in more than half of Motorola's revenues. Brown, he said, must be reacting to "getting trashed in the marketplace."

Copyright © 2008 IDG Communications, Inc.

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