Motorola spinoff to be named Motorola Mobility

By Wailin Wong
Posted July 1, 2010 at 1:21 p.m.

Motorola Inc. said its spun-off mobile devices and home company will be called Motorola Mobility, with the remaining business being named Motorola Solutions Inc.

The new names were disclosed in a Thursday filing with the U.S. Securities Exchange Commission that outlined more details of Motorola’s planned separation into two companies. The split is scheduled for the first quarter of 2011, and the registration filing with the SEC marked an important step in the process.

As previously announced, co-Chief Executive Greg Brown will head Motorola Solutions, consisting of the networks and enterprise mobility businesses. Enterprise mobility makes communications equipment for public safety agencies, as well as retail and industrial customers. Co-CEO Sanjay Jha will lead the mobile devices and home business.

Motorola has created a wholly owned subsidiary called Motorola SpinCo Holdings Corp. to be the holding company for Motorola Mobility. The separation will involve distributing shares of Motorola SpinCo to Motorola shareholders.

According to the SEC filing, Motorola SpinCo will be based in Libertyville. Motorola has said it’s considering other cities for its headquarters, including San Diego, but has not yet made a final decision. The spun-off company has more than 20,000 employees.

The businesses forming Motorola Mobility posted a net loss of $1.3 billion in 2009 on revenue of $11.1 billion, the filing said. Mobile devices accounted for 65 percent of the 2009 revenue. Parsing the revenue by customer, the filing said Verizon Wireless accounted for 17 percent, followed by Sprint Nextel with 13 percent. Verizon is the single-largest customer of both the mobile devices and the home business. Home specializes in cable TV set-top boxes and other equipment for cable operators.

The filing also explained that Motorola Inc. will be licensing logos and trade names from Motorola SpinCo, including the company’s “stylized M logo.” The sharing of these brands “could result in product and market confusion,” the filing warned.

Motorola said the two companies will sign different agreements that set the rules for their relationship, including how they will sort out employee benefits, intellectual property and tax issues. The two entities will also ink commercial agreements to cooperate on certain products and services, including iDEN, a proprietary technology used in Sprint’s Nextel push-to-talk service.

Motorola SpinCo’s board so far consists of Jha and William Hambrecht,  chief executive of investment bank WR Hambrecht & Co. Hambrecht joined Motorola’s board two years ago as part of an agreement with activist financier Carl Icahn, who has an 8.75 percent stake in Motorola and had pushed for a break-up.

Motorola executives have said the separation will be beneficial because, among other reasons, the networks and enterprise mobility businesses will be freed from their burden of propping up the long-troubled mobile devices division. The companies are expected to have distinct bases of customers and investors, with Motorola Mobility being more consumer-centric and Motorola Solutions focusing on the business-to-business market.

Jha has said he aims to return the mobile devices business to profitability by the end of the fiscal year. Under his direction, the company has concentrated on making smart phones powered with Google’s Android operating system. Motorola’s latest device, unveiled last week, is the Droid X at Verizon.

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One comment:

  1. Innocent_III July 1, 2010 at 12:25 pm

    “Motorola Mobility?” Sounds like a battery powered chair for the elderly.