In an effort to decrease steep declining sales and profits, Motorola Inc. is considering a sale or spinoff its now free-falling cell phone business.
A company’s spokesman said the company said it is looking at ways to “better equip its mobile devices business to recapture global market leadership and to enhance shareholder value.” It wasn’t clear whether that means a spinoff, sale or joint venture is more likely.
“It sounds like everything’s on the table,” Morningstar analyst Jordan Zounis said.
Motorola said separating the mobile devices business, which is dominated by cell phones, would “permit each business to grow and better serve its customers.” Its two smaller businesses are home and network mobility, which sells TV set-top boxes and modems, and enterprise mobility solutions, which sells computing and communications equipment to businesses.
Greg Brown, Motorola’s new CEO said in a written statement, “We are 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.”
Zounis suggested that Motorola might be a good candidate for an Asian company that could help it gain in key international markets while helping to shore up its U.S. market strength.
“What they need is a lower cost structure and better access to Asian markets,” he said.
The mobile phone industry has always been a cut-throat industry. Apple’s new entry in the market with its revolutionary iPod is making things worse. Nokia and Samsung are focused like a hawk in designing strike-back marketing strategies in an attempt to hold their global market share position. Google’s Android cell phone operating system plus the 700 MHz wireless spectrum bid is adding lumber to the fire in a hyper-competitive environment where only the fittest will survive.