Is Motorola’s split a good call?
TEXT OF STORY
KAI RYSSDAL: Chalk up another one for activist investor Carl Icahn. He has been after Motorola to split itself in two: cell phones in one corner, two-way radios, set-top boxes and wireless equipment in the other. He got his way today. Of course it didn’t hurt his cause that Motorola shares have been trading at five-year lows.
Marketplace’s Lisa Napoli looked into whether the split might turn things around.
LISA NAPOLI: With revenue up on one side of the business and profits down on the other, you might understand why Motorola would want to break itself in two.
IAN GILLOT: Motorola is in a lifeboat in some very, very stormy seas right now, and what they’ve just done is to just grab the mobile devices guy and thrown him overboard.
That’s mobile industry analyst Ian Gillot. He says he doesn’t think the split is the wisest strategy, given how connected the two divisions are, and given the current sour mood at Motorola’s cell phone business, with a revolving door of executives and tanking sales.
GILLOT: If you’re going to spin it out, then you want it to have some momentum. You want new product. You want, you know, excited employees. You haven’t got any of that.
At least not since Motorola’s once red-hot product, the RAZR, got dull, and there were no follow-up phone successes in the wings, but Mark Frieser, of communications firm IDT, says for the company that made the first mobile phone, a split might be just the ticket.
MARK FRIESER: It will allow the handset manufacturers to concentrate on what it is the consumers and the carriers want.
Forrester analyst Ellen Daley says in the end there’s really just one main reason for breaking Motorola into two separate companies.
ELLEN DALEY: The spin-off is really to I think give relief to the shareholders.
And those are the people who’ve really got Motorola’s number.
In Los Angeles, I’m Lisa Napoli for Marketplace.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
