Management at Motorola (MOT) is in the midst of an ugly capitulation. It now as much as admits that it cannot run the company with any success, even though it is spinning off the albatross of its handset unit. At one point, Motorola has 22% of the global cell phone industry. On a good day that is now 10%. The operation, the company’s largest, is losing over $1 billion a year and its revenue is falling at a rate of about 30%.

The company has decided to follow dumping handsets with a reorganization of its second largest division.

The operation Motorola plans to rend into bits is its home and network mobility unit. According to The Wall Street Journal, “Until now it had been organized as an array of businesses, making cable set-top boxes, modems, cable infrastructure and network gear to carry voice and data signals.” One of the new businesses will handle set-top boxes, one will handle traditional cellular network products, and the last will handle advanced technology including WiMax.

Since Wall St. is already aware that the unit has three businesses under one roof, the action does not make it easier for observers to understand the company and its finances. It does make it easier for shoppers to come to Motorola and bid for pieces.

A cynic’s take on the announcement would be that Motorola management does not believe it is competent to run what will be left of the company once the failing handset business is gone.

It is management assuming a level of mediocrity about itself, a failure of its will to operate instead of auction.

Douglas A. McIntyre