Motorola may spin off
its handset business, the weakest part of a wireless giant that has seen hard
times and a management shakeup in recent months.

The company is "exploring the structural and strategic realignment of
its businesses to better equip its Mobile Devices Business to recapture global
market leadership and to enhance shareholder value," Motorola said in a
statement Thursday. "The company's alternatives may include the separation
of Mobile Devices from its other businesses."

The handset unit has had trouble coming up with a successor to the popular
Razr phone and in last year's third quarter it fell to third place in worldwide
sales behind Samsung. But spinning off the division, which forms the largest
part of Motorola's business, would be a drastic move.

Motorola had 13 percent of the worldwide handset market in last year's third
quarter, down from a 21 percent share a year earlier, according to Gartner.
Samsung had 15 percent
and Nokia 38 percent.

Thursday's announcement doesn't guarantee the handset business will be spun
off. CEO Greg Brown said in the statement that Motorola was exploring ways in
which the unit can recover faster and retain and attract talent, plus help shareholders
"realize the value of this great franchise."

In its fourth-quarter results announced last week, Motorola said the Mobile
Devices Business lost US$388 million on revenue of $4.8 billion, down from a
profit of $341 million on revenue of $7.8 billion a year earlier. Fourth-quarter
sales were up in both the Home and Networks Mobility group, which makes set-top
boxes and wireless infrastructure, and in Enterprise Mobility, which benefitted
from Motorola's acquisition of Symbol
Technologies early last year.

Motorola as a whole lost $49 million for the year. CEO Ed Zander stepped down
in late November, replaced by Brown.

Such a spinoff is overdue, according to Samuel Wilson, an analyst at JMP
Securities in San Francisco.

The phone unit's problems go deeper than a drought of hit products. It needs
to act more like Nokia, he said.

"The business model they need to develop is one where they don't try to
outguess the market, but instead launch a lot of products and let the market
decide what's a hit," Wilson said. Nokia succeeds at this by integrating
its supply chain so it can quickly speed up production of products that catch
on, he said.

Though the Mobile Devices Business stands out as the "sucking chest wound"
at Motorola, the whole company could stand to be broken into three entities,
he said. The other two would be the home networking group and the enterprise
group.

"There are no synergies between the divisions," Wilson said.

Motorola's stock (MOT) was up $1.24 at $12.74 in after-hours trading late Thursday.

IDG News Service

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