Motorola is to split into two companies, one making mobile devices and the other making network infrastructure, the company said.
The companies will operate separately and be publicly traded. Motorola expects the split to take place in 2009, if it gets the necessary approvals.
The decision follows a review of the company's mobile phone business, announced 31 January and conducted by the management team, the board of directors and independent advisors. Motorola is following in the footsteps of Nokia, which put its network activities into a joint venture with Siemens, and of Ericsson, which put its mobile phone business into a joint venture with Sony.
The split will provide improved flexibility, more tailored capital structures, and increased management focus - as well as more targeted investment opportunities for shareholders, according to Greg Brown, Motorola's president and chief executive officer.
Based on current plans, the creation of the two stand-alone businesses is expected to take the form of a tax-free distribution to Motorola's shareholders, subject to further financial, tax and legal analysis, resulting in shareholders holding shares of two independent and publicly-traded companies.
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