Analysts: Motorola's Handset Spinout Raises Prospects for Core Units

Observers see many distractions disappearing for Motorola's other businesses with the spin off of its mobile handset business.

Like a bitter partner after a nasty divorce, the businesses that make up half of Motorola's $37 billion in revenue may think "good riddance" now that Motorola has chosen to spin off its dominant handset business.

But those various divisions, which range from public-safety radios and wireless network infrastructure to cable set top boxes, wireless LANs and bar-code scanners, will now have to stand on their own, without the financial benefit of the division that generated half of the company's revenue.

"Now they will have to sink or swim on their own," said Phillip Redman, research vice president at market researcher Gartner.

That could mean that those other Motorola businesses now have an opportunity to "blossom over time," rather than being dragged down by the sinking mobile device business, said Ellen Daley, principal analyst at Forrester Research. "There is an opportunity now to build up another whole brand in that other $18 billion business," she added.

Without the distraction of the problems faced by the mobile handset business, Motorola executives can focus more closely on those businesses, observers believe.

"I think when a company is bleeding, others will suffer from managerial inattention," said Shiv Bakhshi, director of mobility research at IDC. "Management was looking to shore up the high profile business, so other businesses being wrapped up in the story of Motorola sliding from number one to number two on the handset side was demoralizing for those other businesses," he added.

How much those other Motorola businesses have suffered is anybody's guess, but Motorola is still "by far the leader" in public-safety radios and networking. And it is either second or third behind Cisco Systems in wireless LAN technology thanks to its acquisition of Symbol, and has a commanding position in the set top box market ahead of Cisco's Scientific-Atlanta unit, Daley said.