During a half-hour conference call with investment analysts this morning, Motorola CEO Greg Brown provided very few more details regarding his company's plans to become two companies.
"Today's announcement that we are creating two new businesses will create many benefits...As separate, publicly traded entities, the Mobile Devices business and the Broadband and Mobility Solutions business would each have global scale and leadership in key markets," Brown told analysts. "Each company would benefit from improved flexibility, a capital structure more tailored to its individual business needs, and increased management focus. Investors will have a more targeted investment opportunity, and employees and management will be more closely aligned with each company's goals and objectives."
Brown maintained that this move would help the Mobile Devices business to accelerate its recovery process, after what everyone now acknowledges to be a significant slump. But one of the hardest problems Motorola is facing -- one that appears without a solution that will please everyone -- is what to do with the brand name. The CEO acknowledged that the brand has value to both businesses.
"I believe strongly with these efforts, along with our brand, our people, and our intellectual property, Mobile Devices will be well positioned to regain a leadership position as a focused, independent company," Brown said at one point, implying that Mobile Devices would retain the Motorola brand. "I'm equally confident that the Broadband & Mobility Solutions [B&MS] business will benefit as a result of this action as well. It competes in very attractive markets, has leadership in many arenas, and has the people, intellectual property, and product portfolio to enjoy future success as an independent business."
And later, Brown told an analyst, "Obviously the Motorola brand is strong, it's tested, and it's proven, and is valuable obviously to Mobile Devices as well as other assets and parts of the business. So I think maybe as we undertake a coherent brand strategy, it's important to the success of many of our businesses, and we'll formulate and refine that in the next several months going forward."
But throwing cold water on the theory that Mobile Devices would walk away with the brand, the logo, and most of the current management, was Brown's statement that he's leading the search for a CEO for the Mobile Devices business. As that process is ongoing, he said, "I'm doing both the CEO of Motorola as well as the head of Mobile Devices. Upon securing a leader in Mobile Devices, I will return to being the CEO of Motorola."
Conceivably, both companies could both be Motorola, but that might be confusing -- not unlike CBS' TV production arm retaining the name "Paramount." One possible option on the table is that Motorola could decide to do a "Sony Ericsson" type arrangement, where the brand for one of the new companies is paired with another brand.
Filed deep in Brown's cabinet of hypotheticals is the subject of Carl Icahn, one of the company's largest investors and someone who is reportedly eager to add his own associates to Motorola's board of directors. Icahn has been a vocal proponent of major reform for the company, and certainly today's move qualifies. Analysts obviously see the possibility for either of the two halves of Motorola to be easier for Icahn's minions to penetrate than Motorola as a whole.
The Mobile Devices business has already named its chief financial officer: Marc Rothman, a Motorola veteran and recently its comptroller. Paul Liska, currently Motorola CFO and hired just last month, will be the CFO of B&MS.
The separation of the two businesses, Brown stated toward the end of today's discussion, was made easier by the fact that there were redundant management structures within Motorola's two divisions. "We have corporate functions that serve the individual businesses today," he said. "We have HR and Finance and Legal, and an entire structure within Mobile Devices. We also have those requisite structures within the other businesses already -- within Broadband & Mobility Solutions...So that existing structure is already there."
The CEO declined to speculate when the Mobile Devices business would return to profitability, nor to say whether a cash infusion would be inquired to give that new company a shot in the arm.
Source: BetaNews
