With Research In Motion’s annual shareholder meeting scheduled to take place later today, one popular RIM-focused analyst is calling for the company to split its handset and network businesses into two separate companies. “RIM’s organization, like its handsets, needs modernization. By acting now, splitting RIM into network and handset businesses may target opportunities and unlock significant shareholder value,” RBC Capital Markets Managing Director Mike Abramsky wrote in a note to investors on Tuesday. “RIM’s end-to-end solution was conceived when data devices and networks were nascent — but times have changed,” the analyst continued. Abramsky believes the standalone network business can target a market of roughly 400 million Android devices, Windows Phones, tablets and other devices with “affordable, efficient, cross-platform mobile push messaging, social networking, cloud and business data services (and software)” that is already interconnected with 595 carriers around the globe. On the other end, splitting off RIM’s devices business could accelerate handset innovation, strengthen developer relationships and help the company prioritize its customers and developers over its carrier partners — a sentiment thought by some to be paramount to RIM’s success moving forward. Abramsky reiterated his price target of $35 for RIM stock, noting above-average risk.
Motorola announced Tuesday that its board has approved a reverse stock split ratio of 1-for-7, and the company will finally split into two separate entities on January 4th, 2011. In just over a month, Motorola will change its name to Motorola Solutions, Inc. and its mobile division will separate to form a new publicly traded company, Motorola Mobility Holdings, Inc. The reverse split will boost the value of Motorola’s current stock, which will be traded as MSI starting January 4th. New stock will be issued for Motorola Mobility, which will trade under the symbol MMI. “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,” Motorola co-CEOs Greg Brown and Sanjay Jha said 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.” Following the split, Brown will be CEO of Motorola Solutions while Jha will become CEO of Motorola Mobility. More →
Today, Motorola announced that it would be holding a special meeting for all stockholders on November 29. The company is seeking approval of a reverse split buyback of common stock; ratios being reported are anywhere from 1-for-3 to 1-for-7.
“If approved by stockholders, the reverse split is expected to be implemented on Motorola Solutions common stock in the first quarter 2011, immediately following Motorola’s previously announced separation into two, independent public companies,” reads the press release. “Motorola’s Board of Directors believes that implementing a reverse stock split on Motorola Solutions outstanding shares is likely to improve the marketability and liquidity of Motorola Solutions common stock.”
An approved, reverse stock-split will obviously not affect the ownership stake any one shareholder has in the company, but the stock price will increase by a factor of 3 to 7 (depending on which split ratio is approved). The release also noted that investors who end up with a fraction of a share in the company — as a result of the reverse split — will be given cash for the partial share. More →