Motorola to split into two companies

Motorola will now group together the mobile devices unit with the home division, which includes television set-top boxes. The unit will be placed under co-CEO Sanjay Jha while fellow co-CEO Greg Brown will be looking after the enterprise mobility and networks businesses.

The new plan represents a “cleaner and more compelling configuration for our shareholders and our customers,” said Brown in an interview.

Both the companies will share the Motorola brand, Jha owning the brand, and licensing it to Brown. Brown's company will assume Motorola's outstanding debt, which is expected to be about $3.3 billion at the time of divide.

Motorola’s new deal
Motorola’s decision was struck over a series of high-level meetings and two days of board meetings in late January, reported persons familiar with the matter.

It is reported that once the deal is incorporated, the two companies will account for half of Motorola's current sales each. Motorola recorded sales of $22 billion in 2009.

“We have been at times a drain on resources on other businesses, and we've reduced shareholder value. Together we will be best positioned to lead in the convergence of mobility, media, and the Internet.

“Our expanding portfolio of smart phones and end-to-end video content delivery capabilities will enable us to provide advanced mobile media solutions and multi-screen experiences for our customers,” said Jha.

“Through 2009, we have improved our balance sheet so that both entities will have solid capitalization to have operational and strategic flexibility. There's is a new opportunity to market our new converged devices,” he added.

The CEO also talked about the new business adding value to each other, reaching both home entertainment and mobile device goals.

The new business will also mean a tax-free dividend of shares.

Motorola remains under pressure
However, despite Thursday’s news, Motorola remains under pressure as it faces competitive pressure from the likes of Apple Inc.'s iPhone. Its businesses continue to face decline as a result of weakened consumer and government spending.

However, many analysts reason that the company is strong and resilient towards their growth strategy.

“They're doing well on their smart-phone strategy, and there remains a lot of opportunity there,” said Matthew Thornton, an analyst at Avian Securities LLC.

Motorola shares rose by 3.9 percent in after-hours trading Thursday.