Motorola to sell phone business?

Could Ericsson buy it?

4 February 2008 13:12 GMT / By Katie Scott

Motorola is considering selling its beliguered mobile phone business according to online reports.

The company seems to be caving to pressure from activist investor Carl Icahn who called for a sale of the mobile phone business, which is making a loss.

The phone division accounts for about half of Motorola's revenue.

But analysts are already saying that potential buyers will not go for the mobile phone business which is "clearly struggling" especially with concerns about world economic problems ahead.

Despite this, Reuters is reporting that Ericsson chief executive Carl-Henric Svanberg said that his firm would look at any assets put on sale by Motorola.

"As professional business leaders we look at everything, but we would take a very cautious view on such a thing because we do believe you are better off doing it on your own", Svanberg told an analysts' conference.

Dell, Samsung Electronics and Chinese firm Huawei have also been listed by analysts as potential buyers.

Analysts are valuing Motorola's loss-making phone unit at between $9-12 billion, which would be less than two-thirds of its 2007 mobile sales.

Says Reuters: "Whoever picks up Motorola's mobile phone unit will have to contend with its lack of an exciting new phone line and the unit's financial troubles, but also will gain a well-known brand in a period of strong growth for cell phones".

In separate news, Motorola has announced that its chief executive Greg Brown is to take direct control of the handset business, replacing Stu Reed.

Reed, who took over as head of the mobile phone unit last Summer, will stay at Motorola and work closely with Brown, spokeswoman Jennifer Erickson said on Sunday.

Brown took over as CEO in January, replacing Ed Zander.