Motorola Inc is aiming to split the company into two separate entities as early as January, according to Co-Chief Executive Greg Brown, who will take the top job at its government and business unit. Motorola previously said it would split in two in the first quarter creating Motorola Mobility, which will sell mobile handsets and television set-top boxes, and Motorola Solutions, which will supply wireless technology to governments and businesses.
Brown, who will head Motorola Solutions, said on Monday at the unit's first investor conference that he expects revenue growth in a range of 4 percent to 5 percent in 2011 and set a long-term growth target of 5 percent to 8 percent.
This is a slower growth rate than Motorola Solutions' target for growth in a 7 percent to 8 percent range for 2010 as this years projected revenue of $7.7 billion to $7.8 billion, looks unusually strong in comparison with very weak 2009 sales because of economic weakness last year.
The company expects revenue at its proprietary iDen network equipment business to fall to $300 million in 2011 from $400 million in 2010. It had previously said it expected a decline in sales as U.S. operator Sprint Nextel cuts spending on its iDen network. But given current economic uncertainties, analysts said they were uncertain how Motorola would sustain even the lowered expectations for 2011.
"We'd want to see how they get there in this tough economic climate," RBC analyst Mark Sue said. Brown expects Motorola Solutions to have an investment-grade rating at separation and vowed to consider dividend payments after the split but he did not give a time frame for a dividend.
Motorola Solutions, which drew 58 percent of its revenue from North America in the third quarter, is looking to markets like China for growth, according to Mark Moon, the unit's senior vice president for sales. "We need to get more growth from international markets," Moon said. In particular he sees growth from public sector customers such as public safety organizations.
"There's clearly still a lot of money flowing to governments and governments are still spending," he said citing opportunities in both the United States and overseas. In particular, Motorola cited growing efforts by public safety groups to build broadband wireless networks for services such as video feeds from the scene of an accident.
However, Gene Delaney, the company's executive vice president for products and operations, said it would take some time for such projects to make a big difference. "I would think of 2011 as a lot of trial activities. I wouldn't look for material revenue from broadband until 2012 or 2013," Delaney said.
Motorola is splitting in two after years of losses at its mobile phone business, which, until recently, had a tough time coming up with products that were competitive with rivals such as Apple Inc and Research In Motion. Co-CEO Sanjay Jha will head the Motorola Mobility unit. Motorola shares were up 8 cents at $8.07 on New York Stock Exchange. (Reporting by Sinead Carew; editing by Gerald E. McCormick and Derek Caney)
