Splitting Motorola: Will this make Icahn happy?

You have to hand it to corporate raider Carl Icahn: He sure knows how to stir it up.

Wednesday morning, ailing Motorola announced that it will split into two companies next year. The news doesn't come as a shock to the many who believed something dramatic had to be done to fix Motorola's troubled handset business. And it probably doesn't surprise Icahn, who has been hounding Motorola for nearly a year.

The question that's now bound to be on the mind of people who watch Wall Street like most people watch Sunday football: What does Icahn think about this?

Last year, Icahn waged a proxy campaign for a seat on the company's board of directors and as of early March, he held a 6.4 percent stake in the Shaumburg, Ill., company. On Monday, he announced he was filing suit in Delaware court to get access to Motorola documents regarding its board of directors, financial performance, and expenses such as executive use of the corporate aircraft.

This year, Icahn is trying to get a four-person slate onto Motorola's board. Motorola CEO Greg Brown said in a conference call Wednesday that the company offered Icahn two seats, but he turned down the offer. Brown also said (I wasn't in the room, so I can't say if it was with a straight face or not) that pressure from Icahn didn't have an impact on the decision to split the company in two.

Suuure. And former Motorola CEO Ed Zander stepped down last year to spend more time with his family.

We contacted Icahn's office in New York City and we'll let you know if or when he does, in fact, have something to say about today's news. But should he like this? Motorola shares were only up about 2.5 percent in midday trading, so it's not like this news is stirring hearts on Wall Street. In fairness, it hasn't been a great day for the financial markets, but you would expect a little more enthusiasm than what we're seeing so far.

Here's one outcome Icahn may like: Motorola gussies up the handset business and sells it, as News.com's Marguerite Reardon discusses in a post aptly titled,"Is Motorola putting lipstick on a pig?" That would get Motorola out of a tough, frequently low-margin, and crowded business. It would also provide the company with the cash to focus on its lower-profile but more successful Broadband & Mobility Solutions business, which does everything from enterprise and government work to cable set-top boxes.

Of course, doing what Icahn wants doesn't always mean investors are amply rewarded. In October, when Icahn was throwing knives at the management of BEA Systems (an enterprise software maker since acquired by Oracle), News.com's Dawn Kawamoto took a hard look at Icahn's impact on companies in which he gains board seats and the companies that turn him away. The results, according to her analysis, were quite mixed.

So the king of the corporate raiders doesn't have all the answers. Unfortunately, up to now, neither has Motorola's management.

Update: Now we know what Icahn thinks. In a letter to Motorola's board of directors released after trading ended Wednesday, Icahn called the Motorola split long overdue, but questioned the company's timetable. He also said he plans to continue with his proxy fight.