The company will spin out the its Semiconductor Products Segment as a separate listed company, and will concentrate its future efforts on its core communications businesses. Motorola’s share price jumped 9.9% yesterday, closing at $13.5, as the markets digested the news.
This is the second fixture that Motorola has parted company with in recent weeks. Chairman and CEO Christopher Galvin, a grandson of Motorola’s founder, announced last month that he would leave the firm following a disagreement with the board over the company’s direction.
Motorola’s semiconductor unit has not been performing well recently. In the second quarter, it was the only one of the company’s units to record an operating loss, $125 million. Sales at the unit were $1.1 billion in the first quarter, down 11% on the year, while orders were off 23% to $1 billion. Overall, Motorola’s second quarter sales were $6.2 billion, with net earnings of $119 million.
Under the plan announced yesterday, Motorola will sell off part of the business through an IPO, with the remaining shares distributed to Motorola shareholders.
Investment house Merrill Lynch [MER] came out in support of the move, believing the move indicated Motorola’s commitment to adapting its business model faster than the market had anticipated. Although it did say that an outright sale of the business might have been preferable.
This article was based on material originally published by ComputerWire.
