Motorola realigns phone business

Schaumburg-based Motorola Inc.'s Mobile Devices business was reorganized this week to help prepare for its spin off next year, the company said Thursday.

The struggling business, which has slipped to No. 3 in the global mobile phone market, has shuffled around executives as well as phone lines.

"Our priority is to improve the performance of our Mobile Devices business and regain our leadership position in the industry by consistently delivering compelling new products," said spokesman Chuck Kaiser. "We are driving ahead with our plan to create two independent, publicly-traded companies well positioned for standalone success."

The handset business has failed to produce more winning phones since the ultra thin Razr phone debuted in 2004 and has met with growing competition.

Whether Mobile Devices even will make it through next year to spin off is a concern, said Edward Snyder, industry analyst and principal at Charter Equity Research.

"It's losing $1.2 billion a year, which means it would need a huge source of cash to stay alive until it could get back on its feet, which will take at least two years," said Snyder. "That means at least $3 billion in cash. Where are they going to get that?"

Thursday's realignment aims to couple software and hardware teams closer together and get the product on the market faster, said Kaiser.

The handset business must change and perhaps these measures could help, said Rick Franklin, telecom analyst with Edward Jones.

"However, daily execution has been more of a problem than strategic thinking, in my opinion," said Franklin.

"It is good that Motorola is becoming more customer and product focused. However, I believe that they likely thought that they were already customer and product focused two or three years ago. They will be if they can execute this vision. Only time, unfortunately, can tell."