Moto to Spin Off Device Unit … What Now?

But that may be a moot point as the operating profile for that line of business is so weak that many Wall Street analysts wonder whether it can survive on its own. After a wildly popular RAZR and its me-too successors fell on the sword of overexposure, Motorola has been unable or unwilling to innovate its way into competing with the iPhone or new models from No. 1 Nokia and Samsung. Sales for the fourth quarter of 2007 dropped 18.2 percent, from $11.79 billion to $9.65 billion, as Motorola’s profits plunged 84 percent thanks to the drag from the handset business. 2008 is not looking cheery either: UBS analyst Maynard Um for example cut his estimate for the company’s handset sales down to 130.2 million units for this year, from 145.6 million.

Conventional wisdom says that a joint venture with a stronger handset maker — from Asia, perhaps — looking to increase its presence in the U.S. market may be a better bet than going it alone; or, maybe the unit will be bought outright.

“Could this be the beginning of a recovery for Motorola?” asked analyst Jeff Kagan. “It will take time to occur, but it could be. This could be the start of the recovery for the company. Shareholder value should show an increase, at least short term. Then it depends on the process. This is very early in the planning stages. Motorola is giving no speculation or forward projections yet.”

How the shares will be split (other than it will be tax-free and taking place in 2009) and how the branding will shake out also remain questions at time of posting.

Share this article: Email, Slashdot, Digg, Del.icio.us, Yahoo!MyWeb, Windows Live Favorites, Furl
Add this article feed to: RSS, My Yahoo, Newsgator, Bloglines