All Things Digital

Motorola added another dancer to its conga line of disappointing quarters today, posting an ugly first-quarter loss. The ongoing collapse of its post-Razr phone business continued to weigh heavily on the company, which lost $194 million in the quarter ended March 31. That’s significantly worse than its year-ago loss of $181 million. Sales fell about 21% to $7.45 billion, from $9.43 billion a year ago. Mobile-devices losses were $418 million on sales of $3.3 billion, down 39% from the year-earlier quarter.

Suffice to say, the gruesome performance fell short of Wall Street expectations. Motorola (MOT) shares slipped into the mud following the news. They’re trading around $9 right now, down some 4%.

Not to worry, though, says CEO Greg Brown. Motorola, which plans to shed its money-losing handset division in 2009, is well positioned for recovery. “Motorola is still a huge business and an iconic company,” he told USA Today. “I see a vibrant, very successful mobile-device business with a fresh portfolio that is aggressive and competing effectively [in the global market]. These elements, I think, will allow it to compete ferociously in the future.”

Motorola has finally taken a RAZR to its handset business. In the face of growing pressure to bolster its ailing stock price, Motorola (MOT) yesterday announced plans to divide itself into two publicly listed companies–one focusing on mobile phones and the other on broadband and mobility services.

“Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and Board of Directors, together with independent advisers,” CEO Greg Brown said in a release. “Creating two industry-leading companies will provide improved flexibility, more tailored capital structures and increased management focus–as well as more targeted investment opportunities for our shareholders.”

On a conference call with Wall Street analysts, Brown said the decision to carve out its handset business was the result of an evaluation process announced in late January, not a move engineered to appease billionaire investor-provocateur Carl Icahn who sued the company in a Delaware court Monday demanding access to minutes of board discussions about the division’s potential spin-off.

Looks like Ed Zander has a new title for that book he once joked about writing–“I Lost My Job. I Hate My Customers.” On Friday, Motorola said that Zander would turn over the job of chief executive to President Greg Brown on Jan. 1.

“It was a tough decision because I love the job,” said Zander. “I will be 61 in January and it is time to make way for one of the younger guys.” Sure is. With Motorola’s global market share slipping into the mud–it now ranks No. 3 after Nokia and Samsung with around a 13% share, down from about 21% just a year ago–the company is in desperate need of a turnaround.

Whether Brown’s the guy to do it remains to be seen. Certainly, investors aren’t so sure. “There are some investors who are disappointed that they didn’t bring in somebody from the outside,” Kaufman Brothers analyst Raimundo Archibold told Bloomberg. “This would have been an opportunity to bring in some fresh blood.”

Joan Lappin, president of Gramercy Capital Management, agreed. “I don’t see him as a person who is going to come in and razzle-dazzle the troops,” she said. “He’s kind of a bland guy.”