Motorola - So Much for Synergy

Well, I guess as I expected, Motorola is indeed going to be spinning off the handset business. While I'd hoped that Motorola would keep it all together and generate synergies that really no other wireless firm on this planet could, what I really expected was that someone would snap up the Mobile Devices business (as Motorola calls it), and I suppose that could still happen at any time, even after the spinoff occurs. In fact, I'd still bet on it.

So, while I'm disappointed with this move, one needs to be realistic, and realism often means that what might be needs to take a back seat to this quarter's goals. Carl Icahn (I don't think he has a Web site, but, then, why would he need one?) is just doing his job, trying to build short-term value for investors. Apart from analysts, no one really thinks long-term anymore. And we analysts have little at risk in our forecasts and prognostications, so short-term thinking dominates.

This behavior is, in fact, endemic. All businesses are basically investors, money managers at the core. This creates an eternal, never-satisfied tension between the 3.5 constituencies that have skin in the game. There are, of course, investors, who only care about the stock price going up within the time frame they have in mind; customers, who only care about getting the goods and services they need at the lowest possible price; and employees, most of whom seem to care only about getting paid and making more money (in terms of salary or other short-term pay), although I do know many who really do care about the long-term prospects of their employer. And the .5 is managers, who are, of course, also employees, but who have a different form of relationship with the company, one that is often designed to be longer-term, but with such behavior enforced via stock options, making them an interesting hybrid of investor and employee. Of course, all employees, some would argue, need to be investors, thereby aligning their attitudes and actions with long-term goals. This does not work. Just ask anyone at Bear Sterns - or Adelphia, Enron, Worldcom, or many other seemingly stable companies that suddenly crushed the life out of the long term of all 3.5 constituencies in recent years. Maybe Icahn is right. Get what you can now, and move on. That's all that matters. I refuse to buy into this, but I have to allow the possibility that he's correct. After all, he makes a lot more money than I do. But the pursuit of bucks alone isn't a goal worth having.

Motorola's handset division has, I think, a long and happy life ahead of it regardless. Demand for cell phones and related devices will increase, driven by expanding global opportunities, data-driven subscriber units, innovations in styling and packaging, and continuing technological evolution. But I still think it's too bad that Motorola could not build the synergies that would have been worth far more than what the valuation of the resulting two independent businesses will reflect.

• Wireless / Mobile
• Carl Icahn
• handsets
• Motorola