Business Insider are reporting that Motorola will split into two new companies. One company will house its mobile phone business, while the other will contain pretty much everything else. The companies will be called Motorola Mobility and Motorola Solutions, respectively. So what is the reason for this split?
It turns out that the primary driving force behind the split is due to the sudden growth of the smartphone market, and in Motorola’s case, the sudden growth of Android. This is because Motorola have decided to ditch Windows Mobile, Symbian and the like and focus 100% on our friendly green robot. As such, it makes sense to assume that Motorola Mobility will simply focus on building a cutting edge Android smartphone business.
So what does this mean for the shareholders? Well, the term is ‘reverse stock split’. For every seven Motorola shares you own, they will give you one Solutions share, and similarly, for every eight Motorola shares you own, you will be given one Mobility share. This appears to value the Mobility spin out as the more valuable arm of Motorola.
[Source: Business Insider]