Motorola to Separate Semiconductor Biz
Monday, October 6th 2003, 12:00 am
News On 6
CHICAGO (AP) _ Motorola Inc. plans to make its semiconductor operations a separate, publicly traded company, chairman and chief executive Christopher Galvin said Monday. Shares of Motorola surged 7.5 percent on the news.
The telecommunications equipment maker plans an initial public offering of a portion of its semiconductor business followed by a distribution of remaining shares to shareholders, subject to Motorola board approval and other conditions, Galvin said.
``Over the past several months, we have carefully weighed the best way to optimize the long-term potential of Motorola's semiconductor business with the leverage we would gain by concentrating our resources on our communications products and integrated electronic systems businesses,'' Galvin said in a statement.
The proposed separation reflects Motorola's intention to increase its focus on consumer products.
``We believe that by creating two independent companies we will be able to better unlock the value of Motorola's existing businesses,'' Galvin said during a conference call. Galvin said he recommended the move to the board.
John Pepper, presiding director of Motorola's board, said the directors have accepted the recommendation to split off the semiconductor operations.
``As the company's governance body, we are enthusiastic about the intended separation ... and the enhanced future prospects of Motorola as a focused communications and integrated electronic systems company,'' Pepper said.
David Devonshire, the company's chief financial officer, said the separation will improve the way customers view the company.
``A direct correlation of performance of stock value and compensation adds the ability for SPS to build an even stronger position with customers who may perceive a conflict with Motorola's other businesses,'' he said.
Galvin announced last month that he was stepping down as Motorola chairman and CEO, a move that sent the Schaumburg-based company's stock soaring to its highest level in more than a year.
At that time, analysts forecast the selloff of one or more of Motorola's struggling business lines and other restructuring moves they said were needed to reinvigorate the lumbering wireless giant.
Galvin already had taken the company through two restructurings, most recently a two-year overhaul that slashed nearly 60,000 jobs, with mixed results. Galvin is the grandson of Paul V. Galvin, who co-founded the company 75 years ago.