The Wall Street Journal-20080202-Motorola CEO Steps In To Lead Handset Unit

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Motorola CEO Steps In To Lead Handset Unit

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Motorola Inc. Chief Executive Greg Brown assumed direct oversight of the company's handset division Friday, a day after the company had said it was considering selling or spinning off the business.

Mr. Brown succeeds Stu Reed, who was appointed in July to run the business from a previous job overseeing supply-chain management. Mr. Reed will stay with Motorola and work closely with Mr. Brown, a Motorola spokeswoman said.

The management change is a sign of continuing turmoil at the division, Motorola's flagship operation. Mr. Brown has run other businesses at Motorola but has never run the cellphone unit.

The business, which accounts for half of Motorola's sales, has seen its global market share cut in half in the past year since the popularity of its last hit phone, the Razr, faded.

Motorola's stock rose 10% Friday, or $1.19, to $12.69, in response to Thursday night's announcement about the handset unit.

Also yesterday, activist investor Carl Icahn named the four people he is nominating to the board of Motorola, saying he hopes gaining representatives on the board will ensure the telecom-equipment maker follows through on plans to spin off or sell its cellphone division.

Mr. Icahn, who has been pushing for a breakup of the company, had announced Thursday his intention to mount a proxy fight to gain seats on the board. Yesterday, he identified the nominees as Frank Biondi Jr., the former Viacom Inc. chief who helped Mr. Icahn in his failed efforts to take control of Time Warner Inc. two years ago; William R. Hambrecht, founder of underwriter W.R. Hambrecht & Co.; Lionel C. Kimerling, a professor at the Massachusetts Institute of Technology and an expert on semiconductors; and Keith Meister, managing director of the Icahn investment funds.

Mr. Icahn said he was confident the group had the "necessary skills to assist Motorola in executing on its recently announced, and long overdue, decision regarding the separation of its mobile-devices business in a manner which will maximize value for all shareholders." Mr. Icahn holds 5% of Motorola shares.

The investor had tried unsuccessfully last year to gain a seat on the board. Shareholders think Mr. Icahn has a better chance of winning his proxy campaign. "There is a greater chance that Icahn's message resonates better with investors at this time," said Manish Goyal, a managing director at TIAA-CREF.

It is difficult to value the loss-making handset division, which has a leading market share in the U.S. and Latin America, and is No. 3 globally. Its value depends on how quickly the division can be turned around and whether it includes the right to use the Motorola brand and its trademark batwings.