Motorola to Cut Off Limb to Save the Body
In a desperate attempt to keep the handset division’s problems from affecting the entire company’s operations and viability, top executives of Motorola Inc has announced recently that it will perform a surgical remedy to the problem.
The handset division will be cut off and established as a separate entity. If the plan materializes, the market will see two Motorola entities that will be traded publicly by 2009. One company will be for the handset products line while the other will be for the rest of the Motorola electronics products which include a line of network equipments and television set top boxes.
The plan is intended and hoped to provide a painful solution to the continued downfall of company stock values due to huge losses from the handset division. The crisis faced by the Motorola cellular phone line has brought to the company an agonizing drop in market values reaching to as much as 60 percent which translates to approximately $22 billion.
Motorola handsets continue to sail on perilous seas of stiff competition, first by the undisputed market leader Nokia and recently by the upcoming Samsung brand from South Korea which deposed Motorola from its perennial number two position.
Sources from within the troubled electronics company place the time line at about eighteen months for the whole process to be completed and operational. There are still a lot of concerns that need to be addressed as a necessary consequence of the planned remedial break up.
On top of the list is the fate of its approximately 66,000 employees scattered around the globe. Company top brass needs to draw clear-cut criteria as to who shall move to the newborn handset firm and who shall remain with the mother company. Likewise, the issue of talent piracy needs to be addressed. Motorola might have difficulty in keeping their top talented artists and professionals from jumping overboard and abandon the sinking ship.
The other path that needs to be eased out is the possibility of a take over or merger with another company that could buy Motorola out of its predicament. The company’s executives are eyeing at Japanese and Chinese telecom companies as possible investors. Again, as in the case of a simple split up, the fate not only of the stockholders but also of the employees are at stake.
At any rate, Motorola is definitely going to have a rough and challenging year ahead.