Carl Icahn Still Thinks Motorola Should Be Split-Up

Activist shareholder, Carl Icahn said last week that he still thinks Motorola should be broken up into separate companies - and that its handset division could fetch around US$10 billion if sold. Motorola's market capitalisation is currently around US$43 billion. Although the handset division is still losing money, around half of the company's cash-flow still come from selling mobile phones.

"We do talk with them periodically," he said in an interview on the news TV channel, CNBC. "Motorola has great value. If you really split Motorola up, which I still think should happen ... you're buying that handheld business for only $10 billion, which is next to nothing."

However, there seems to be little extra value in a split of the company into its three primary divisions.

During the last quarter, Motorola's network and home mobility division reported profits of US$207 million on revenues of US$2.6 billion in an increasingly competitive market. The Enterprise Mobility division reported profits of US$302 million on sales of US$1.9 billion. Even an optimistic valuation of the three divisions if sold separately would not yield much more than US$50 billion for shareholders - and with an expected return to profits for the handset division next year, the rationale for a split does looks weaker.

Earlier this year, Icahn failed to secure a seat on the board of Motorola after an acrimonious public war of words between the company and his investment company. At a recent press conference though, Motorola's CEO, Ed Zander said that the two men are still on talking terms. Zander said "it was never personal. We always kept it totally business" and the two occasionally meet as Ichan is still a large shareholder in the company.

Posted to the site on 14th October 2007