The troubled Motorola, Inc., under pressure from billionaire financier Carl Icahn's hostile moves, has announced that it will split into two independent, publicly-traded companies. The split will create a mobile devices company and another controlling Motorola's broadband and mobility solutions operations, which include its network equipment, enterprise and public safety businesses.

Motorola, which registered a loss of $49 million in 2007 after a $3.66 billion profit in the previous year, has been the target of an escalating proxy battle launched by Icahn. Icahn is the company's second-largest shareholder.

The company's share of the mobile handset market has been on the decline, and it has slipped to number three worldwide behind Finland's Nokia and Korea's Samsung Electronics. And this has been the main cause of its troubles, including Icahn, who has been demanding that Motorola sell off its mobile devices operations.

The company says the split will take the form of a tax-free distribution to Motorola's shareholders, subject to further financial, tax and legal analysis, resulting in shareholders holding shares of two independent and publicly-traded companies and is expected to be completed in 2009.

According to the company, the creation of two companies would enhance flexibility, sharpen focus and give shareholders better targeted investment opportunities. The company is said to have launched a global search for a new CEO for the mobile devices business.

In January end, Motorola had announced that it was conducting a strategic review of its business leading to a separation of the mobile handset business. (See: Motorola mulls restructuring; may split operations)

In the meanwhile, the company has rejected one of the four nominees suggested by Icahn for election to the Motorola board in the forthcoming AGM in May. While it has readily agreed to two of the nominees, it has turned down the name of Keith Meister, who heads Icahn's $8 billion fund. Icahn is also suing Motorola to force it to hand over documents related to strategic decisions related to its mobile devices business.

Motorola CEO Greg Brown says, "Our priorities have not changed with today's announcement. We remain committed to improving the performance of our mobile devices business by delivering compelling products that meet the needs of customers and consumers around the world."

He adds, "We believe strongly in our brand, our people and our intellectual property, and expect that the mobile devices business will be well-positioned to regain market leadership as a focused, independent company."

The company, however, said there was no assurance the planned split, which is subject to further financial, tax and legal analysis, would occur.