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With the handset operations still accounting for more than half of Motorola's revenues, sale or spin-off would leave the rump company in a much changed state. This could be positive for the two profitable units, Enterprise Mobility (based around the WLAN and Symbol products) and Home and Networks Mobility, whose value is largely ignored in the current structure. However, both are in business of scale and would be left dwarfed by other major players in their respective markets. This could well lead to these units also being separated and sold or spun off, sparking a complete break-up of Motorola comparable to that of former AT&T equipment arm Lucent. Of course, the process already began when Motorola spun off its chip business, now private equity-owned Freescale, and other non-core operations. Even more dependent on scale is the mobile infrastructure operation, which would be left vulnerable by a reduction in size of Motorola, and the reduced leverage with customers and suppliers that would result from this. Despite the downward drag of the handset unit's performance, the mobile networks business would also lose the advantage, much exploited by Nokia in the past, of being able to offer tightly integrated RANs and devices, especially in new technologies like WiMAX and LTE.

A complete break-up would destroy the vision that once gave Motorola real differentiation - of having an end-to-end product portfolio for mobility and advanced multimedia networks, spanning devices, infrastructure and consumer equipment like set-top boxes. Increasingly integrating these lines to provide total platforms for the rising breed of converged, quad play carriers seemed a real way to set Motorola apart from its larger rivals in infrastructure, but the ambitious strategy has been largely swept aside by more pressing worries about boosting handset margins and performance.

In the wake of the wave of consolidation that has overtaken the wireless infrastructure sector in the past two years, Motorola's mobile networking activities will almost certainly be in the sights of some of its rivals, if they can be separated from the rest of the company - offering a profitable unit with some strong technologies, notably a head-start in Mobile WiMAX, though one that is unlikely to be overpriced because of its risks in trying to compete alone when so overshadowed by the scale of the big three, Ericsson, Alcatel- Lucent and Nokia Siemens Networks.

However, none of these three would be likely to bid. Ericsson CEO Carl-Henric Svanberg commented in an interview following the company's results announcement last week that if Motorola Networks came up for sale, his company would take a look but stressed that major acquisitions could create more problems than benefits. Meanwhile, Alcatel-Lucent is still struggling with its own merger and its purchase of Nortel's 3G activities, and Nokia Siemens has similar teething troubles with its year-old venture, and so both would be likely to steer clear of further distracting major transactions. A more likely candidate might be Huawei, which has a 3G joint venture with Motorola and aims to increase its international business. Meanwhile, the enterprise and home mobility units could both appeal to Cisco.

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