Motorola to give mobile company $4b, remove debt

Motorola will put between $3 and $4 billion dollars into its cellphone business when it splits off in 2011 into a new company. This will be done after the company buys back most of its debt, according to a Friday Wall Street Journal report. The new company would also not have any pension liabilities and other obligations in other to give it the best possible chance of success.

"The co-CEOs have a common vision and continue to work together and with respective teams to position each business to stand alone and succeed," said a company spokesperson. The company has been eyeing a split since 2008, when activist investor Carl Icahn maintained the company would be worth more when separated. The cellphone business lost nearly $5 billion in the last three years thanks to more popular devices from the competition.

The new company, to be called Motorola Mobility, would focus on cellphones and cable set-top boxes. It would also have the resources necessary to acquire technologies or create its own and thus be on the "offensive," said one person familiar with the matter.

The other company, Motorola Solutions, would get any remaining money and be burdened with pensions and other liabilities, say sources close to the matter. This half of the company would make public safety radios, handheld scanners and telecommunications network hardware. This part of the current company is the breadwinner, with a reported revenue of $11.1 billion in 2009.

By Electronista Staff