Motorola splits itself up; Separates handset business

Motorola has carved out its biggest headache--its struggling handset business.

Motorola (all resources) on Wednesday said that it will split into two companies--a handset business and a broadband and mobility unit that features networking equipment for enterprise and consumers. The latter unit, which includes IP video gear, wireless network equipment, cable set-top boxes and broadband network infrastructure, has the most profit potential. Motorola in January said it was considering a quarantine for its handset business.

According to Motorola's statement, both units will be publicly traded. The move will give both companies "improved flexibility, more tailored capital structures, and increased management focus - as well as more targeted investment opportunities for our shareholders," according to Motorola CEO Greg Brown.

That line about "more targeted investment opportunities" could roughly translate into a sale of the handset business or acquisitions. For instance, Motorola's handset business could acquire a player like Palm with its own currency. But first the handset unit needs a CEO.

Motorola said the split would occur in 2009.