Motorola may Restructure or Dump Mobile Phone Division

After the New York stock market closed yesterday, Motorola announced that it is considering ways to deal with its ailing mobile phone division. Some have speculated this means selling or spinning-off the division, but the statement’s language leaves open other possibilities.

Motorola said it would consider separating the handset division from the company and that it is looking at ways to “better equip its mobile devices business to recapture global market leadership and to enhance shareholder value.” This leaves the door open for an outright sale, a spin-off, restructuring or a joint venture with another company.

Last month MobileCrunch reported that Motorola(’s) Handset Market Share and Profits (were) Down. At the end of 2006 Motorola had 23% of the worldwide mobile handset market share. By the end of 2007 this share dropped to only 13%.

Yesterday’s announcement sent Motorola share up 12%, or $1.40, to $12.90 at the open of today’s trading.

Last year the company fought off a proxy fight with billionaire financier Carl Icahn. Icahn wanted some of his people on the board of directors and an overhaul of Motorola. Icahn said he was “pleased” to hear that the company is working on changing but he still plans to fight for board seats the spring.

“This announcement by Motorola will not deter us from that effort,” said the shareholder, who is believed to have lost hundreds of millions of dollars on his investment in the company. “We believe Motorola is finally moving in the right direction but certainly still has a long way to go.”

Motorola said that separating the mobile devices division would “permit each business to grow and better serve its customers.” The two smaller divisions are home and network mobility, which sells TV set-top boxes and modems, and enterprise mobility solutions, which sells computing and communications equipment.

“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,” Motorola CEO Greg Brown said in a written statement.