In yet another striking example of the power of investors, Motorola has decided to split into two entirely separate companies to appease cries for improved market shares.
Photo from ABC News
Investors have been urging Motorola to increase profits ever since its chief executive Ed Zander warned them about potential losses in 2007.
Make that former Chief Executive Ed Zander; the new Motorola split 86-ed him.
The company recently changed its profit estimate from between $11.6 billion and$11.8 billion to between $11.8 billion and $12.1 billion.
In the land of billions, those two projections are drastically different.
As quoted in Soft32.com, Bernstein’s Paul Sagawa stated that the profit drop was linked to a war between Motorola and Nokia. Each company is battling it out in markets where phones are becoming increasingly cheaper.
“What I want to hear is that they comprehensively address their cost structure,” said Sagawa. “They need to understand that they can’t win a price war with Nokia.”
It seems as though Motorola has sustained enough wounds to retreat and redraw the battle plans.
The two new entities will be Mobile Devices and Broadband/Mobility Solutions. Both will be publicly traded.
Will the new split appease the investor gods? Or is Motorola flogging a dead horse on the battlefield?
With the two new companies, Motorola has the opportunity to sharpen their focus in two different areas.
Little else is known about the functions of the two other than Mobile Devices will make the physical phones while Broadband/Mobility Solutions will encompass the technologies supporting the phones.
If each new company can restructure their management and improve their individual productivity, they may get back on track.