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Motorola to spin off mobile unit in early 2011

Motorola Droid 2

It’s taken the better part of three years, but today Motorola made it official: the company is spinning of its mobile unit from the rest of the company effective January 4, 2011. Motorola’s mobile unit—that includes handsets and set-top boxes—will continue to do business under the name Motorola Mobility, while the remainder of Motorola will change its name and do business as Motorola Solutions.

“Today’s announcement marks another important milestone toward the upcoming separation that is expected to benefit Motorola, its stockholders, as well as each company’s respective customers and employees,” said Motorola co-CEO’s Greg Brown and Sanjay Jha, in a joint statement. “We look forward to taking advantage of the opportunities before us as we begin the new year as two independent, publicly traded companies.”

Brown will continue as CEO of Motorola Solutions, while Jha will become CEO of Motorola Mobility. Motorola Solution’s primary businesses will be in systems like communications equipment uses by public safety and emergency workers, barcode scanners, and walkie-talkies.

Motorola stockholders will receive one share of Motorola Mobility stock for every eight shares of Motorola common stock they hold as of December 21, 2010. Immediately after that distribution, Motorola will perform a one-for-seven stock split on Motorola common stock—meaning every seven shares of Motorola common stock will become one share of Motorola Solutions. The Motorola Mobility stock distribution and reverse stock split for Motorola Solutions are intended to lift the share trading price for both companies. Motorola’s shares have been trading for between $7.50 and $8.50 for most of 2010, up from a 25-year low of $2.98 in early 2009.

Motorola originally announced its plans to separate its mobile unit into a separate company back in 2008.