Motorola’s spin on a spinoff

By Michal Lev-Ram

Turns out those rumors swirling around Motorola might be true after all — or are they?

Late Thursday, Motorola (MOT) issued a press release saying it is “exploring the structural and strategic realignment of its businesses,” and that the company’s options may include the “separation of mobile devices from its other businesses.” (Put it in plain English, Motorola is considering selling its flailing cell phone unit). But statement also noted that “there can be no assurance that any transaction will occur or, if one is undertaken, its terms or timing.” Motorola’s VP of mergers and acquisitions, Don McLellan, meanwhile told Fortune on Thursday that the company wasn’t committing to making any big changes, only that the exploration of its options would be done “expeditiously.”

So what exactly does Motorola’s equivocal wording mean?

Well, the ambiguity could be a stalling tactic to get rebellious shareholders like Carl Icahn off the company’s back, at least temporarily. Icahn, the phonemaker’s third-largest shareholder, recently argued that selling off Motorola’s handset business would produce almost $20 billion of additional shareholder value. Shortly after Motorola’s made its announcement, Icahn issued his own statement, saying that while he was pleased to see Motorola finally considering splitting up its mobile device unit, he had no intention of changing his game plan.

“We have previously informed Motorola that we expect to run a slate of directors for the upcoming annual meeting and this announcement by Motorola will not deter us from that effort,” Icahn said. “We believe that Motorola is finally moving in the right direction but certainly still has a long way to go.”

McLellan acknowledged Motorola’s stock “is  dramatically undervalued. And that’s unacceptable to all concerned.”

Motorola’s shares rose more than 10 percent in after-hours trading.

But Motorola will have to do much more than “explore” to get its stock to appreciate enough to appease Icahn.  Plus, it’s now got thousands of employees who are likely worrying about their fate if the company does eventually decide to sell or spin off its handset business.

Don’t cry for Motorola just yet, though. While its mobile phone business is the most public face of the company and accounts for about half of its revenues, it is actually just one of three business groups. The company also sells radios to governments and makes cellular infrastructure equipment and set-top boxes, which it sells to cable companies. And unlike its cell phone unit — which incurred an operating loss of $138 million last quarter and has been rapidly losing market share — some of these other businesses are actually showing healthy growth.