Motorola to Break Into 2 Companies

Motorola Inc. announced plans to separate its struggling handset business from other operations Wednesday, forming two separate publicly traded companies after months of agitation from frustrated investors.

The suburban Chicago-based cell phone maker has been under pressure from billionaire investor Carl Icahn for changes meant to revitalize its cell-phone business. The cell phone unit has seen its sales and stock price plummet with the company unable to produce second act to the once-popular Razr phone.

Motorola said the handset business will operate separately from another company that will encompass its home and networks business, which sells TV set-top boxes and modems, and its enterprise mobility solutions, which sells computing and communications equipment to businesses.

"Our priorities have not changed with today's announcement," Chief Executive Greg Brown said in a statement. "We remain committed to improving the performance of our Mobile Devices business by delivering compelling products that meet the needs of customers and consumers around the world."

Schaumburg-based Motorola said it hopes the transaction will be tax-free, allowing shareholders to own stock in both of the new companies. If the deal is approved, the two units would be separated in 2009.

Brown said Motorola will launch a search for a new chief executive of the Mobile Device business as it works to regain favor with customers and its No. 2 position in the cell phone market.

Motorola lost that spot last year to rival Samsung Electronics Co.

Finland's Nokia Corp. is the industry leader.

"We believe strongly in our brand, our people and our intellectual property, and expect that the Mobile Devices business will be well-positioned to regain market leadership as a focused, independent company," Brown said.

Wednesday's announcement was just the latest shake-up at Motorola, which rode the success of the iconic Razr phone from 2005 to 2006, but has stumbled since amid stiff competition.

Last year, the company pulled back from developing markets, cut 7,500 jobs and CEO Ed Zander resigned.

A flock of executives have left the company this year, and more cuts and changes are likely as the new management team scrambles to retain control in the face of a revived threat from Icahn.

Icahn, who has been steadily increasing his Motorola position, disclosed in a filing this month that he now owns 142,362,000 million shares, or 6.3 percent -- up from 5 percent a month ago.

Wednesday's announcement came two days after Icahn sued Motorola, seeking documents about its executives and its cell phone business.

Icahn plans to use the material in his battle to win four seats on the Schaumburg-based company's board, his second proxy fight in two years with Motorola. He rejected a concessionary offer of two seats from the company.

A message left with Icahn's office was not immediately returned.

Motorola shares climbed 45 cents, or 4.6 percent, to $10.21 at the open of trade.

http://www.motorola.com

US Stocks Head for Lower Open

U.S. stocks headed for a lower open Wednesday after orders for big-ticket manufactured goods declined for a second straight month in February.

The Commerce Department report that durable goods orders fell 1.7 percent last month -- rather than rising as the market expected -- appeared to rekindle some unease about the health of the economy.

The report comes a day after stocks generally extended their gains after two sessions of sharp advances. The market's recent ability to add to its climb has been greeted by bullish investors as a sign that its troubles are on the mend; Wall Street hadn't succumbed to a recent pattern of selling off after such a strong move upward. The Dow Jones industrial average has risen more than 425 points in the past three sessions.

But the durable goods numbers made it unclear whether the rally would hold.

Government figures are also due after the opening bell on new home sales.

Dow Jones industrial average futures fell 38, or 0.30 percent, to 12,477. Standard & Poor's 500 index futures fell 4.30, or 0.32 percent, to 1,347.10, while Nasdaq 100 index futures fell 4.80, or 0.26 percent, to 1,821.20.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.50 percent from 3.51 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose $1.01 to $102.23 in premarket electronic trading on the New York Mercantile Exchange.

Corporate news appeared to weigh on some investors. Private equity firms leading a $19.5 billion buyout of Clear Channel Communications Inc. were having difficulty reaching terms with the banks committed to financing the deal and the plan was close to collapse, according to a report by The Wall Street Journal.

In other corporate news, Motorola Inc. said it plans to split its troubled handset business from other operations, creating two separate, publicly traded companies.

Electronic parts manufacturer Jabil Circuit Inc. posted a fiscal second-quarter loss and warned its third-quarter results will fall short of Wall Street's expectations.

Overseas, Japan's Nikkei stock average fell 0.30 percent. In morning trading, Britain's FTSE 100 fell 0.48 percent, Germany's DAX index fell 0.41 percent, and France's CAC-40 was off 0.62 percent.

STOCKS TO WATCH

Yum Brands Inc. (YUM:35.24, +1.08, +3.2%) is expected to report fourth-quarter earnings of 42 cents a share, according to analysts polled by Thomson Financial.

News Corp. (NWS:20.01, +0.62, +3.2%) is forecast to post earnings of 27 cents a share in the fiscal second quarter.

Humana Inc. (HUM:81.84, +2.32, +2.9%) is likely to report earnings of $1.32 a share in the fourth quarter.

Clorox Co. (CLX:63.09, +1.75, +2.9%) is estimated to report fiscal second-quarter earnings of 54 cents a share.

Equifax Inc. (EFX:37.00, -0.09, -0.2%) is likely to post earnings of 57 cents a share in the fourth quarter.

Manitowoc Co. (MTW:39.17, +1.14, +3.0%) is forecast to post earnings of 68 cents a share in the fourth quarter.

Computer Sciences Corp. (CSC:42.14, -0.18, -0.4%) is forecast to report earnings of $1 a share in the fiscal third quarter.

Post Properties Inc. (PPS:42.62, +0.35, +0.8%) is expected to post earnings of 9 cents a share in the fourth quarter.

BE Aerospace Inc. (BEAV:41.84, +3.23, +8.4%) is projected to report fourth-quarter earnings of 44 cents a share.

Anadarko Petroleum Corp. (APC:60.04, +1.56, +2.7%) is estimated to post earnings of 77 cents a share in the fourth quarter.

Wendy's International Inc. (WEN:25.18, +0.78, +3.2%) is expected to report earnings of 23 cents a share in the fourth quarter.

Principal Financial Group (PFG:61.21, +1.60, +2.7%) is likely to report earnings of $1.01 a share in the fourth quarter.

Lincoln National Corp. (LNC:56.09, +1.90, +3.5%) is likely to post earnings of $1.36 a share in the fourth quarter.

PartnerRe Ltd. (PRE:79.48, +0.20, +0.3%) is estimated to post fourth-quarter earnings of $3.19 a share.

Savvis Inc. (SVVS:22.62, +2.42, +12.0%) is forecast to post earnings of 2 cents a share in the fourth quarter.

After Friday's closing bell, The Wall Street Journal reported on its Web site that the House Judiciary Committee will convene a hearing on Feb. 8 to examine Microsoft Corp.'s (MSFT:30.45, -2.15, -6.6%) proposed takeover of Yahoo Inc. (YHOO:28.38, +9.20, +48.0%) . The hearing will consider what the impact on competition of a potential tie-up between the two Internet giants would be, the newspaper said.

Watch list

Concerned by reports of Chinese military hacking into Pentagon computers, four House lawmakers are asking the Treasury Department for information related to its review of the acquisition of 3Com Corp. (COMS:4.05, -0.08, -1.9%) by a Chinese company and its U.S. partner. In September, 3Com said it agreed to sell itself for $2.2 billion to Huawei Technologies Co., the largest networking company in China, and Bain Capital Partners LLC. The lawmakers want to know "the extent and nature" of Huawei's ties to the Chinese People's Liberation Army and if such ties constitute a threat to U.S. national security.

CSK Auto Corp. (CAO:8.98, +3.03, +50.9%) confirmed that it has received an unsolicited proposal from O'Reilly Automotive Inc. to acquire all of the outstanding shares of CSK Auto but O'Reilly Automotive Inc. (ORLY:30.62, +1.19, +4.0%) has declined to sign a confidentiality agreement which precludes access to non-public information. CSK Auto said it plans to proceed with the process to enhance shareholder value as planned.

Dollar Thrifty Automotive Group Inc. (DTG:26.02, +1.64, +6.7%) lowered its adjusted earnings-per-share estimate for 2007 to a range of 90 cents to 95 cents from $1.75 to $1.85 previously. In GAAP terms, it expects earnings to be flat or post a loss of 5 cents a share. The car rental company cited weaker industry demand in the travel market, excess fleet capacity in the industry, and a weakening used car market for its more bearish outlook. The company also said it is suspending its share buyback program.

Liz Claiborne Inc. (LIZ:22.71, +0.82, +3.8%) has finished the strategic review of 13 of the 16 brands it placed under review and plans to conclude evaluation of the other three brands, Ellen Tracy, Kensie, and Mac & Jac, by the end of the first quarter, the company said Friday. It also said it will sell most of the assets and liabilities of Prana to Prana Living LLC, a company formed by Prana's management team and Steelpoint Capital Partners for $36.5 million in cash. The company will pay out $18.4 million to Prana founders in connection with the purchase of Prana in 2005 and record the amount as a charge in first quarter earnings.

Motorola Inc. (MOT: 12.69, +1.19, +10.4%) confirmed it received a notice from Carl Icahn to nominate four directors to the company's board. The notice, Motorola said, indicated that Icahn affiliates beneficially hold about 5% of Motorola's outstanding shares, or about 114.3 million shares. Separately, The Wall Street Journal said the company's CEO Greg Brown is assuming direct oversight of the company's handset unit after pushing aside division head Stu Reed.

Walt Disney Co. (DIS:30.66, +0.82, +2.8%) said it signed new five-year contracts for both its Chief Executive Robert Iger and Chief Financial Officer Thomas Staggs. The new contracts expire on Jan. 31, 2013, for Iger, and on April 1, 2013, for Staggs.