Motorola targets 1st quarter of 2011 to complete spinoff of handset, home units

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Motorola targets 1Q 2011 to split off handset unit

SCHAUMBURG, Ill. — Struggling mobile phone maker Motorola Inc. said Thursday it plans to split off the business units that make the phones and television set-top boxes into a separate publicly traded company early next year.

Motorola said in late 2008 that it would spin off only its handset unit by the third quarter of 2009, but it put the separation plan on hold as the recession deepened and sales continued to deteriorate.

Now, it has decided to include the home business unit, which makes the set-top boxes, as part of the new company as well. The spinoff is planned for the first quarter of 2011.

Motorola Co-CEO Sanjay Jha, who will serve as the chief executive of the handset and home business, said the new combination “brings together two highly complementary and innovative organizations. Together we will be best positioned to lead in the convergence of mobility, media, and the Internet.”

Motorola’s cell phone business has been in a tailspin. The Schaumburg, Ill.-based company hasn’t produced a hit since the wildly popular Razr phone in 2005. In recent months, Motorola has had its eyes set on smart phones running on Google Inc.’s Android operating system.

The company’s other co-CEO, Greg Brown, will head what’s left of the company, made up of the enterprise mobility and networks businesses.

Earlier, the company said that if the spinoff of the handset unit did not happen before Oct. 31, 2010, Jha would get $30 million in cash. It’s unclear if Jha will be paid that amount.

Shares were up 15 cents, or 2.3 percent, at $6.80 in after-hours trading following the announcement. Shares earlier added 2 cents to close at $6.65.