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Even a breakup of the troubled company may not head off another proxy fight with billionaire financier Carl Icahn.
Motorola, which fought off Icahn's bid for board seats and a drastic overhaul just a year ago, said late Thursday it would consider separating the handset unit from its other two businesses. The announcement drove its shares more than 10 percent higher in after-hours trading and touched off a round of speculation about what form a makeover might take
-- and whether it can reverse the company's steep slide.
The Schaumburg-based company said it is looking at ways to "better equip its mobile devices business to recapture global market leadership and to enhance shareholder value." It wasn't clear whether that means a spinoff, sale or joint venture is more likely.
"It sounds like everything's on the table," Morningstar analyst Jordan Zounis said.
The revised strategy comes just one month after Greg Brown succeeded Ed Zander as CEO and a year and a day since Icahn initiated a proxy fight to shake up a company that was already in the throes of a severe decline in sales and profits. After grabbing world market share of 23 percent in 2006 on momentum led by its Razr phone, the company has lost nearly half that as rivals outpaced it with successful new products.
Motorola prevailed in last year's proxy battle. But with the end of its slump nowhere in sight, it has dropped its opposition to splitting off or shedding its core business.
Icahn, while "pleased" to hear that Motorola is exploring his proposal, nevertheless still plans another fight for board seats this spring, as he said he had warned the company recently.
"This announcement by Motorola will not deter us from that effort," said the shareholder, who is believed to have lost hundreds of millions of dollars on his investment in the company. "We believe Motorola is finally moving in the right direction but certainly still has a long way to go."
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 Motorola said separating the mobile devices business, which is dominated by cell phones, would "permit each business to grow and better serve its customers." Its two smaller businesses are home and network mobility, which sells TV set-top boxes and modems, and enterprise mobility solutions, which sells computing and communications equipment to businesses.
"We are exploring ways in which our mobile devices business can accelerate its recovery and retain and attract talent while enabling our shareholders to realize the value of this great franchise," Brown said in a written statement.
Zounis suggested that Motorola might be a good fit for an Asian company that could help it gain in key international markets while helping to shore up its U.S. market strength.
"What they need is a lower cost structure and better access to Asian markets," he said.
The timing is poor for a sale in this market, the analyst said.
Motorola's shares ended the regular trading session at $11.50 Thursday
-- down 28 percent in 2008 and 56 percent since hitting a six-year high of $26.30 in October 2006. The shares climbed $1.25 in extended trading after the company's announcement.
Brown last week bluntly portrayed a lack of progress toward a recovery when discussing Motorola's weak fourth-quarter results. The company's profit fell 84 percent, handset sales were down 38 percent, and he said its share of the world handset market continues to fall after being reduced by nearly half since hitting 23 percent at the end of 2006.
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On the Net:
Motorola Inc.: http://www.motorola.com/
[Associated Press; By DAVE CARPENTER]
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