Moto’s new co-CEO validates spin-off strategy

Lack of leadership for Motorola’s Mobile Devices unit has been one of many potential nails in the manufacturer’s coffin this year, leading many analysts to question whether spinning off this business makes the most sense. Today’s announcement of the company’s new co-CEOs may seem like an odd move, but according to at least one analysis, the appointment of Dr. Sanjay Jha, Qualcomm’s former chief operating officer, as co-CEO of Motorola and CEO of the company’s Mobile Devices division is a much needed step in the right direction.

“I’m pleased with the person they have,” said Matt Thornton, telecommunications equipment analyst at Avian Securities. “It’s better than my expectations. The timing removes another overhang. The longer you have a lack of leadership, that weighs on morale and your ability to retain talent and recruit new talent. Sooner was better than later, and the person they got was a great candidate. It has to be viewed as a positive announcement.”

Creating a more fine-tuned operating and capital structure will be Jha’s best bet in offsetting the reverse synergies inherent in the split, Thornton said. Motorola shares more than 150 facilities between its two units, which has been another reason many analysts have questioned the financial logic behind a spin-off. Thornton pointed out that the company would not have been able to attract this caliber of leader if it wasn’t planning to break in two. Jha, who has served as Qualcomm COO since late 2006, is often credited with leading Qualcomm’s transformation into a global leader in the mobile phone chip market. As COO, he was responsible for Qualcomm’s corporate research and development efforts as well as serving as president of its CDMA chipset and software division. His appointment caused Moto’s stock to rise the most it has in more than four years.

Two years ago, following the success of Moto RAZR, the company captured 24% market share. Today, while still the number three handset vendor, Moto’s market share is down to 9.2%. Jha will take the reins of the Mobile Device segment as CEO as well as run the company alongside Greg Brown, who will retain CEO status for the Broadband Mobility Solutions group – made up of the Home and Networks Mobility (HNM) and Enterprise Mobility Solutions (EMS) segments. The two co-CEOs will lead the company over the next 12 months in preparation for the Mobile Device spin off next year.