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Motorola may quit mobile phone market
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The struggling American electronics company Motorola is considering breaking itself up through a sale or flotation of its poorly performing mobile phones business.
After a year in which it has been assailed by angry shareholders, Motorola last night announced it was exploring a "structural and strategic realignment" to revive the fortunes of its handsets division. "The company's alternatives may include the separation of mobile devices from its other businesses in order to permit each business to grow and better serve its customers," the company said.
Such a move could reshape the global mobile phones industry, leaving the rump of Motorola to concentrate on radios, networking equipment and household electronics such as television set-top boxes.
Although renowned for its ultra-thin Razr phones, Motorola has been losing market share; it slipped from second to third place in the world last year, behind Samsung and the industry leader, Nokia.
Motorola has been facing break-up calls for more than a year from the billionaire shareholder activist Carl Icahn, who owns 3.3% of the stock and sought boardroom representation last year.
Icahn greeted the announcement with satisfaction: "For many months I have been publicly advocating the separation of mobile devices from Motorola's other business and I am pleased to see that Motorola is finally exploring that proposal."
He warned, however, that he intends to try to unseat four or five of Motorola's 13 board members again at this year's annual meeting: "We believe Motorola is finally moving in the right direction but certainly still has a long way to go."
Motorola's profits slumped by 84% to $100m (£50m) in the final quarter of 2007. Although the Razr has surpassed 50m sales worldwide, the company has failed to follow up the model's success with a broader range of popular handsets.
Analysts have suggested that its technology neither suits burgeoning demand for multimedia functions in Europe and America nor the pressure for low prices which prevails in developing countries.
Motorola's announcement followed speculation of a sale of its phones division in a note published by an analyst at Nomura, who suggested that a Chinese buyer may be interested in the business.
Standard & Poor's last week cut its rating on Motorola's credit, citing little evidence of a recovery. Motorola's sluggish performance prompted a change in leadership at the beginning of the year as chief executive Ed Zander was replaced by chief operating officer Greg Brown.
Motorola's mobile phones division accounts for about half of its $36bn global sales. But its 12% share of the phones market is just half of its level at the peak of the Razr's success in 2006.
Across the Atlantic, Vodafone admitted it has signed up fewer than 10,000 UK residential broadband customers, despite launching its service a year ago. Vodafone signed a wholesale broadband deal with BT and started its service last January. But consumer take-up has been very low. Orange leads the internet market among mobile groups with 326,000 UK customers taking both mobile and broadband, O2 has just a few tens of thousands.
Vodafone said it has spent very little on marketing the service in the UK. Instead it uses it to retain customers in danger of defecting to a rival
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