Investors liked the news. Motorola announced early today that it would split off its handset unit into two public companies. Investors responded by moving Motorola stock up nearly 5% over yesterday's close. Motorola's Greg Brown says that the Mobile Device business will have a new leader, which should make Carl Icahn happy. Icahn, who now holds 6.3% of the company, filed suit this week to force Motorola to hand over documents regarding the company's executives and its cell business.
While it is true that Motorola has dropped the proverbial ball--or in this case its cell phone business advantage--moving from second place to third behind Samsung (Nokia continues its strong hold on first place), what is also true is that investment holds risk. It was no secret that Motorola both missed deploying 3G, failed to have a global strategy in place, and also wasn't able to compete after its Razr success, true the company made unfortunate choices, but also true that none of this was the product of secrecy--taking place in an out-of-the-way smoky room.
Ultimately, spinning off the business may be a good thing for Motorola--although it will still have to aggressively go after the cell phone market and perform, no matter what name is on the building. I just think it's dangerous for investors to blindly cheer the antics of the Carl Icahns of the world who do not perform a service as an investor watchdog, but instead become the bulldog that preys on companies in transition, and rapidly line their own pockets.
So by next year Motorola will be two. Icahn has won this round. Will he stop his suit to get the records? Will he still fight for his team to fill Motorola board seats? I'm betting he's not done.
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