Motorola will be shelling out a ton of cash to ensure that its cell phone division can survive on its own after the upcoming split.
The company plans to buy back all of its debt and pump up to $4 billion in cash into the independent mobile Motorola company, according to reports from the Wall Street Journal. This move should give the new company some nice resources as well as attract investors.
As you may recall, Motorola’s handset division has been in the toilet over the last few years because it failed to innovate and find a device that resonated like the Razr. Additionally, devices like the iPhone ate its lunch and made the company that essentially invented the cell phone want to abandon its mobile division. The split was delayed when the economy crashed last year but it is on track to take place in the first quarter of 2011.
How will a mean, lean mobile-only Motorola do? It’s tough to tell at this moment. The mobile division CEO, Sanjay Jha, has come in and did a lot of housecleaning – he’s streamlined the company’s platform strategy and reduced some of the overhead (read: laid people off). The company looked like it was back on track with the Droid, as the device has sold more than one million units thanks to a massive marketing blitz from Verizon.
The company’s other recent devices have failed to resonate though, as the Cliq, Cliq XT and Backflip aren’t really compelling devices. The upcoming Droid X and Droid 2 should be more appealing, however. I actually can’t wait to get my hands on the Droid X, as that massive screen and speedy processor should make for an excellent smartphone. We’ll have some hands-on time with it next week, so look forward to that.
Looking toward the future, the company has said it will rely on Android and we’ve also heard it’s sniffing around Windows Phone 7. I think that’s a solid platform strategy.
[Via The Wall Street Journal (subscription required)]