'Motorola committed to mobile phone business'

BARCELONA, SPAIN: Motorola Inc said on Monday it is "fully committed" to its mobile phone business and its strategic review is aimed at bringing about a "product-led" recovery for the loss-making division.

The world's third-largest cell phone maker said in late January that it was considering separating its mobile devices unit as part of a "structural and strategic realignment" to help it recapture market share and enhance shareholder value.

"I don't want there to be any confusion. Motorola is fully committed to the mobile devices business and I am fully committed to mobile devices," Chief Executive Greg Brown said at the Mobile World Congress in Barcelona.

Motorola has been losing market share to rivals like Nokia and Samsung Electronics, after failing to come up with a strong successor to its once-dominant Razr phone.

The company is under pressure from activist investor Carl Icahn, who owns a 5 per cent stake in Motorola and says breaking up the company could unlock more value for shareholders.

"We're going to be expeditious about our review," Don McLellan, Motorola's senior vice president for corporate development and strategy, said in an interview on the sidelines of the conference, the world's largest wireless fair.

"The market had dramatically undervalued mobile devices. That was a concern to us," McLellan said, adding, "We know it can regain market leadership."

Motorola executives declined to comment on a report in the Wall Street Journal that the company was in talks with Nortel Networks Corp to combine their wireless infrastructure units, which make network equipment for phone carriers.

The paper said the talks were separate from any plans for Motorola's handset division.

Any deal would follow a wave of mergers in the global telecommunications sector, as equipment makers combine in a bid to gain economies of scale and more pricing power against telephone carriers that are also merging.

McLellan said Motorola's focus was on its mobile devices unit, as other businesses were doing "extraordinarily well."

When asked if that meant the mobile phone unit would be sold or spun off, the strategist said: "We're not putting boundaries on it. We're being as open as we can."

Analysts value the phone unit at between $9 billion and $12 billion, which would be less than two-thirds of its 2007 mobile sales. Spinning off the phone unit could attract focused investors willing to pay a premium.

Yankee Group cell phone analyst John Jackson said Motorola's comments did not shed any more light on which direction the company might take the division.

"I thought it was perfectly opaque," he said, adding that Motorola would have to be committed to the phone unit whether it meant selling it off or keeping it within the company.

As for the possibility of a joint venture with Nortel on the wireless infrastructure assets, Jackson said: "It's questionable whether Networks remain strategic. They've been disciplined in shedding off non-core units."

Motorola shares were up 30 cents or 2.7 percent at $11.56 and Nortel's U.S. shares were up 9 cents or 0.8 percent at $11.16 on the New York Stock Exchange in early afternoon dealings.