Motorola’s plan to spin-off its mobile phone business has been one of the first casualties of the global economic downturn.
Plans to spin-off and either sell or merger the mobile business, which were first announced in the summer, have been put on hold.
“While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009, primarily due to the macro-economic environment, stresses in the financial markets and the changes underway in Mobile Devices,” said Sanjay Jha, Motorola’s co-chief executive officer and CEO of Mobile Devices.
Jha said progress had been made in the separation plan and the company would continue to prepare for “a potential transaction at the appropriate timeframe”.
Motorola said it would consolidate product ranges and refocus investment in the mobile business. It also confirmed its determination to enter the smartphone market in competition with Apple and BlackBerry.
The news of the stalled spin-off came as Motorola reported a 31% fall is sales and an operating loss of $840m in the Mobile Devices business in the third quarter.
A year ago the loss was $248m.
Greg Brown, Motorola’s co-chief executive officer and CEO of Broadband Mobility Solutions, said: “We are also improving our cost structure across the company by implementing further cost reductions. The initiatives announced today, together with prior actions, will result in total estimated annual savings of $800m in 2009.”
Cost-cutting will involve job cuts totalling 3,000.