The business stories that matter, by Fortune's Colin Barr
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March 26, 2008, 7:48 am

Icahn gets his Motorola breakup

Chalk up another victory for Carl Icahn. Motorola (MOT) said Wednesday it would spin off its handset and broadband businesses to shareholders. The decision comes just two months after the activist investor urged the company to split itself in four and days after Icahn sued Motorola to force it to take action.

Motorola said it will search for a new chief executive to head up the handset unit, whose sales have collapsed since the once-popular Razr phone went out of style in 2006. The new chief will have his work cut out for him, given the handset business’ poor performance in recent quarters and the strong gains being chalked up by rivals such as Nokia (NOK) and iPhone maker Apple (AAPL).

“Our priorities have not changed with today’s announcement,” said Motorola chief Greg Brown in a statement. “We remain committed to improving the performance of our Mobile Devices business by delivering compelling products that meet the needs of customers and consumers around the world.” Motorola shares, which have lost half their value since Icahn started agitating early last year, rose 6% in early trading.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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