Motorola to break into 2 in bid to regain leadership

David Jackson, director of marketing and planning at E Ink, points to the E Ink display on the circuit board for a Motorola cellular phone during an interview with Reuters at the company's headquarters in Cambridge, Massachusetts March 29, 2007. (Xinhua/Reuters Photo)

BEIJING, March 27 (Xinhuanet) -- Motorola announced a plan to break its handset unit from the operations to form two separate publicly traded companies in an effort to regain market leadership, media reported Thursday.

Executives said the move will allow the two companies
to better focus on their respective strengths and weaknesses, while accelerating
the turnaround plan for the cell phone unit, which has seen its fortunes slip
after trend-conscious customers lose interest in the Razr flip phone.

"The creation of the two independent publicly traded
companies provides improved management focus and a capital structure that's more
tailored to the individual business needs," said Chief Executive Greg Brown, who
will remain at the helm of the split company's non-cell phone unit. "And it will
provide some improved alignment and agility and will help us going forward."

Specifics of the deal haven't been disclosed, but
Motorola said its handset business will operate separately from another company
offering its TV set-top boxes and modems and its computing and communications
equipment.

Schaumburg-based Motorola said it anticipates the
transaction will be tax-free, allowing shareholders to own stock in both of the
new companies. If the deal is approved by regulators, the two units would be
separated in 2009.

Officials haven't said whether one company or both
will retain the Motorola brand name or which company will distribute stock to
existing shareholders.

(Agencies)