Why The Motorola Breakup is All Wrong

Last Updated Mar 27, 2008 11:33 AM EDT

The proposed breakup of Motorola into two companies just doesn't make any sense. Here's my thinking:

--It's just crazy for a board to cave in to someone like Carl Icahn. He doesn't have the long-term interests of anyone in mind other than his own, and his is a short-term gain to his holding of Motorola shares. In the face of such a blatant greenmailer, doesn't the Motorola board have any backbone? This should be a time when a board defends its CEO and his or her business plan (assuming that the CEO has a credible plan.)

--The logic of spinning off the cell-phone business from the rest of Motorola's operations seems to be that a separately traded public company will attract a new chief executive officer who can put the unit on the path toward sustained profitability. But that begs the question--why can't existing Motorola management, led by CEO Greg Brown, do it? If they can't do it, then the board should jettison the whole lot of them.

--Another problem with the logic is this: by spinning off the cell-phone business into a separate company, Motorola is signalling its lack of confidence in the business. So why would any smart business executive want to take the leap into a business that's in a downward spiral. Only someone with a sado-masochistic complex would want that job.

--My last problem is that the cell-phone business must have crucial ltechnological inks with the wireless network equipment, public-safety radios and hand-held bar-code scanners that the company makes. By getting rid of the cell-phone business, it seems to me that Motorola is taking the risk that its remaining businesses will be adversely affected by the absence of the cell-phone business.

Does anyone else think this is nuts? Can anyone defend it?