Motorola splits its sides

Phone maker Motorola has been formally cleaved asunder and goats have been sorted from the sheep.

The outfit has divided itself into two companies which its managers hope will be a little more focused.

The two new companies are called Motorola Mobility, which sounds like an outfit which takes the elderly to the library every Wednesday, and Motorola Solutions which sounds like something you rub onto piles.

It has taken the managers three years to engineer the split. The company has been the sum of its parts for nearly 82 years now. It invented the mobile phone but managed to lose $4.3 billion between 2007 and 2009 because it could not sell them properly.

Sanjay Jha, who is now the chief executive of Motorola Mobility, managed to turn the outfit around by betting heavily on Android and the fact that Verizon needed a competitor to the iPhone that did not require it to sell its soul to Steve Jobs.

The split means that the outfit is now a smaller fish who has to compete with whales like Samsung.

Jha plans to refocus on a smaller slate of high-end smartphones and new devices, such as a tablet computer, following his company’s launch of 23 smartphones in 2010.

Motorola Solutions gets about a third of its revenue from selling companies a variety of handheld communication and computing devices. Extra if it has to rub in the Solution itself.

The rest of the cash half of the company comes from selling public-safety equipment, such as radios, to local governments. Any extra cash the outfit gets will be invested in coming up with natty public-safety applications of 4G wireless technology and video surveillance.

However,  Motorola Solutions is vulnerable because many public bodies, such as local councils have had to cut back on their budgets. Some US Cities have even laid off coppers so paying more cash to give them natty 4G radios is unlikely.

The downside of the move is that two companies could become prey to a hungry investor who would be after one smaller cheaper company rather than one big one.

Carl Icahn has been identified as one such investor. He has bought more than $2 billion of Motorola stock over the past four years and argued for the split.