Brown throws in the towel

The bad news for Motorola just keeps on coming. Unable to find a buyer for its handset division, Motorola CEO Gregory Q. Brown is going to spin it off to shareholders.

Brown is washing his hands of the critical problem that cost Ed Zander his job. In effect, he's saying that either a) the handset division is a net negative for the stock price or b) the best way to sell it is to cast it loose and make it the new management's problem.

A number of the articles noted what a terrible idea it is to dump Motorola's largest business rather than fix it. Dow Jones (via CNN) has a good take:

Skeptics believe that, over the next year, Motorola will endure customer confusion, interruptions with the supply chain, and ultimately the loss of more market share. More importantly, a lack of stable leadership has left the mobile devices business without clear direction, which is only exacerbated by the uncertainty of a spinoff.

“It's a terrible idea,” said James Faucette, an analyst at Pacific Crest Securities. “It hastens the demise of the handset business.”

As DJ notes, even with a spinoff the new division will need a leader, strategy and a way to keep its top talent.

CNET has an intriguing article in which a disgruntled ex-employee basic says that Motorola's success with the RAZR could be all credited to Chief Marketing Officer Geoffrey Frost — and when Frost died on the job in 2005, so did Motorola’s stream of good ideas.

Carl Icahn — the master of short-term arbitrage and long-term disaster — seems to think the spinoff is good news. I think the stupidity of this strategy — dumping rather than fixing the problems — will become obvious long before Icahn can dump his 144 million shares.