How does reorganization take place in the form of division? The Split of Motorola – Chronicle of the Dive Bomber

Division is one of the most popular forms of LLC reorganization. It is necessary if several founders have different views on the business or the company wants to distribute areas of activity among independent enterprises. The separation procedure is simple, but requires precision in collecting and filling out documents. Let us consider in more detail what features the reorganization of an LLC in the form of division has and how to correctly carry out the procedure from start to finish.

Features and consequences

Reorganization in the form of division is carried out in accordance with Art. 54 of the LLC Law. This means that one large company is divided into several smaller ones. In this case, the parent company is liquidated, leaving behind a minimum of two and a maximum of as many enterprises as capital allows.

The parent company is liquidated, leaving behind a minimum of two and a maximum of as many enterprises as desired.

The main consequences of demerger are the creation of several companies with the same rights and responsibilities as the previous one. Rights and obligations are distributed according to the decision of the founders on the basis of a document - the deed of transfer.

Reasons for dividing the company

Among the motives for dividing the company, several common ones stand out:

• The founders of the company decided to separate and continue the business on their own; during the reorganization through division, everyone receives their share depending on the investment.
• Development of LLC structure and cost reduction.
• Division into companies with different activities.
• Improving competitiveness.
• Optimization of payments to the state treasury.

Reorganization of an LLC through division is regulated by the LLC Law and Art. 57 Civil Code of the Russian Federation. Therefore, it is so important to carry out the process consistently, accompanied by all the necessary documents.

We divide correctly

A limited liability company can be divided in several main stages.

Step one: preparatory

At the first stage, the statutory documentation for future companies is thought out, an inventory is carried out, based on the results of which a transfer act is drawn up, and notifications about the upcoming meeting are sent to all meeting participants (no later than 30 working days).

The founders of the company gather and put the issue of division to a vote. At least 50% of the participants must vote for the reorganization. The decision is confirmed by the minutes of the general meeting. At the meeting, it is necessary to approve the charters of the new companies and the transfer deed.

If the company has a single owner, a written decision is drawn up. Please note that in this case, the decision must indicate the persons who will become the founders of the new LLC.

Step three: collecting documentation and notifying government agencies

Participants need the same documents as for. The only difference is in the new charters for newly created companies and in the requirement for a notarized copy of the transfer deed. The tax office and the Pension Fund are notified. Funds have only 3 business days to notify the funds after the meeting. After this, the tax office sends a check to the LLC, but this is not a mandatory condition. Small companies are inspected less often, large companies more often.

Step Four: Creditors

If the division is initiated at the initiative of one participant, the procedure can be carried out by a court decision.

Instead of the minutes of the board of founders, a copy of the court decision is attached to the main package. The remaining documents are standard, as with any form of reorganization of a company:

1. Minutes of a meeting of directors or a written resolution from the sole owner indicating the form of reorganization.
2. Application to the tax registration authority on form 14001. The document is certified by a notary and stitched there.
3. Accounting report for the last year of the company's operation and transfer deed.
4. Charters of new companies in two copies.
5. A certificate stating that you have notified creditors of the upcoming reorganization (copies of the publication can be attached).
6. Certificate from the Pension Fund stating that the parent company has no debts.
7. Guarantee documentation that confirms the new legal addresses of the newly created companies. If the companies being created have only one founder, then you can take their home address.
8. Charter of the parent company.
9. A copy of the TIN and passports of all founders.
10. Certificate of payment of state duty.

In conclusion, we would like to add that in each region the package of documents may be supplemented, so we recommend checking it with your tax office. It can take up to 3 months to verify documents, but sometimes the process can take up to six months.

The difference between the stages of different forms of reorganization is only in additional documents. You can divide a company in five stages, the main thing is to correctly prepare a package of documents and pass a tax audit.

In the form of division, this is the most profitable option for those companies that need to create a separate legal entity with the cessation of commercial activities of the first one. This is precisely why the division of a company into two differs from the separation procedure, under which the primary form remains in the status of a legal entity.

Reorganization by dividing a company is a method that allows you to maintain existing business activities with minimal losses.

When you need it

Dear readers! The article talks about typical ways to resolve legal issues, but each case is individual. If you want to know how solve exactly your problem- contact a consultant:

APPLICATIONS AND CALLS ARE ACCEPTED 24/7 and 7 days a week.

It's fast and FOR FREE!

The division of a company is resorted to when the existence and further activities of the company within a single company are ineffective or difficult. Often, the decision to split a company arises when controversial issues arise regarding the redistribution of a share of income between shareholders or members of the company.

In this case, the separation process may involve lengthy legal proceedings and clarifications. In some situations, the division of a company is resorted to in order to save the organization. This is necessary provided that the total volume of the company’s liabilities significantly impedes its economic development.

In accordance with the transfer act, the obligations of the divided company are transferred to one of the legal entities that arises at the time of reorganization. In turn, the second person has the right not to assume the obligations of the divided company. It should be noted that the procedure for dividing a legal entity does not deprive it of its powers.

Reorganization of an LLC in the form of division is quite often used at the time of sale of part of the company. At the same time, the direct separation process ensures the most efficient transfer of rights to the divided company, bypassing bureaucratic obstacles.

Conditions of the procedure

Required documents

In order to carry out the procedure of reorganizing a company through its division, you will need to provide the following package of documentation:

• articles of association;
• certificate of ORGN and TIN;
• minutes of the general meeting of shareholders;
• a document confirming the assignment of statistics codes;
• certificate of insurance from the Social Insurance Fund;
• notification to the policyholder from the Pension Fund;
• notification to the policyholder from the Federal Migration Service;
• approximate separation balance sheet of the company;
• a document that will confirm the fact of notification of creditors of the intention to divide the legal entity;
• another list of documentation that is additionally required to carry out the reorganization of the company through its division.

A complete list of documentation that is required to be provided at the time of creation of new organizations:

• full and abbreviated name of the companies being created;
• the size of the companies' authorized capital;
• composition and data of founders;
• TIN and passports of the directors of the companies being created;
• Main purpose and type of activity;
• location of organizations;
• taxation system.

Stages

Below are step-by-step instructions for reorganizing a company by dividing it:

1. The general meeting of shareholders of the reorganized company makes a decision that concerns the features and conditions of the division of the company, the creation of new companies and the procedure for converting shares of the divided company into securities of the new companies being created.
2. The adoption of a decision by the shareholders to approve new charters of organizations, as well as the election of a supervisory board.
3. Carrying out state registration of organizations that were created as a result of division, as an alternative form of reorganization of a legal entity;
4. State registration of the process of issuing shares by new companies.

Scheme options

Simultaneously conducting several types of business activities within the framework of the functioning of one company allows you to strengthen your business niche, simplify the process of managing an enterprise, and also increase its market value. However, this approach may not always be beneficial. So in what cases is it necessary to resort to dividing a company?

Case one. When a company is forced to practice separate accounting	The division of business activities, which is determined by separate accounting, is an excellent reason for tax representatives to look for violations in taxation. As a rule, a company can maintain this accounting if: there is a place for activities that are included in different taxation systems; VAT-taxable and non-VAT-taxable transactions are carried out simultaneously; income tax rate is 20% ; transactions are carried out that are taxed at different VAT rates.
Case two. Unbundling of an organization to optimize taxes	Due to the fact that entrepreneurs have free choice when determining the structure of their business, they also have the opportunity to save money on taxation by legal means. For example, this could include an individual choice of tax treatment. Thus, the organization operates on a common taxation system, and at the same time develops a new business direction with a certain share of expenses. Consequently, the company can transfer its business to a simplified system and register a completely different legal entity. In this case, the company must take care of how to plan its second business line to maximize its efficiency and minimize tax-related costs.
Case three. Division of a company subject to its participation in tenders	It is considered effective to resort to dividing a company with simultaneous merger if the company takes part in various competitions, the basis of which are government contracts from other areas of activity. As a result, it becomes possible to protect your directions and your own assets.
Case four. If necessary, protect company assets	As a rule, tangible and intangible assets may be at risk when any claims are made by tax representatives or counterparties. When a company is simultaneously engaged in several types of business, it by default falls into the risk zone. Restructuring in the form of dividing a company allows you to correctly transfer assets into new structures with all the necessary funds to carry out effective business in the future.

2 types of company division

There are several ways to divide a commercial organization:

In the process of division, independent and non-independent legal units can be created

Position of the law

Reorganization of an enterprise is a rather complex procedure that is associated with a lot of features. To ensure the interests of all participants in this process, as well as to comply with the norms and requirements of the current legislative framework, these features must be taken into account.

From the point of view of the law, in the process of dividing a company, all property rights and obligations in the enterprise are transferred into the possession of each of the business entities directly according to the separation act (balance sheet).

This process is carried out in appropriate shares, and a sample of documentation is transferred to each subject separately.

In accordance with the legislative framework, division of a subject is carried out as follows:

• making a decision to reorganize through division;
• determination of the part of the property and the sources of its formation, which are transferred to each newly created business entity;
• approval of constituent documents, the total size of the statutory capital, the composition of owners, as well as their share in the authorized capital;
• state registration of created companies is carried out;
• the separation balance sheet is signed by the parties;
• a business entity that has been divided is excluded from the Unified State Register.

Reorganization step by step instructions

Using the PPDRUL program, you need to reliably enter all the data and at the end you will receive a ready-made application form.

MIFTS No. 46 for Moscow is located on the territory of a complex of buildings along with IFTS No. 33, MIFTS No. 45,46,47,48,49 and 50, in building No. 3.

Re-registration of real estate during reorganization

The ownership of real estate objects transferred to the company as a result of reorganization by the legal successor must also be registered in Rosreestr, that is, new certificates of ownership of the legal successor’s company must be obtained.

To do this, the legal successor enterprise pays the state fee for registering ownership rights for each object and submits to Rosreestr documents confirming the reorganization of the legal entity, certificates for objects previously issued to the reorganized legal entity, the transfer deed and a transcript to it, which contains a description of each object ( Letter of the Federal Service for State Registration, Cadastre and Cartography dated December 22, 2011 N 14-8339-GE). Then the successor company receives certificates from Rosreestr, which are the final confirmation of its ownership of real estate.

Re-issuance of licenses, permits, intellectual property in connection with the reorganization of a legal entity

If the reorganized company carried out activities that were subject to licensing and the successor company also intends to carry out these types of activities after the reorganization, then the successor company must reissue the licenses and permits of the reorganized company. The specific terms and procedure for re-issuing licensing and permitting documentation for each type of activity are regulated by industry legislation (Federal Law “On Communications”, “On Subsoil”, “On Education”, “On State Regulation of the Production and Turnover of Ethyl Alcohol, Alcoholic and Alcohol-Containing Products and on Limitation of consumption (drinking) of alcoholic beverages”, etc.). But there are several general points.

As a rule, certain deadlines are established for re-issuing licensing and permitting documentation after reorganization. The applicant for re-registration is the legal successor. When re-registering, you must pay a state fee. Re-issuance of licensing and permitting documentation for the successor company is possible while maintaining the conditions that are mandatory for conducting a certain type of licensed activity.

If the rights to the intellectual property of the reorganized company, issued in the form of certificates for trademarks, patents, licensing agreements, have been transferred to the successor company, the successor company must apply to Rospatent with an application to make changes about the copyright holder in the relevant state register (patents, trademarks), paying at the same time state duty. To re-register domain names to the successor company, it must send information about the reorganization to the domain name registrars to make changes to the registers of domain name owners.

Transfer/re-registration of employees during enterprise reorganization

The transfer of employees of the reorganized company to the successor company can be carried out in two ways or a combination of them. The first method is to fire employees from the reorganized company and hire them the next day to work for the successor company. This procedure is carried out until the legal completion of the reorganization.

The second way is to make a record of the company’s reorganization in the employees’ work books after the reorganization. In accordance with Part 5 of Art. 75 and part 6 of Art. 77 of the Labor Code of the Russian Federation, an employee may refuse to continue his work in the event of a company reorganization. Accordingly, in order for employees to take advantage of this right, it is advisable to warn them about the upcoming reorganization by issuing an order on the reorganization of the company, with which they are familiarized with signature. If, before the reorganization, the company’s employees express a written refusal to continue working in the enterprise after the reorganization, the employment relationship with him will be terminated under clause 6 of Art. 77 Labor Code of the Russian Federation. After the reorganization, the remaining employees continue their work, and on the basis of an order from the successor company, an entry about the reorganization is made in the work book. Example entry:

"Limited Liability Company "Dolce" (LLC "Dolce") "____" August 2014 was reorganized by merging with the Limited Liability Company "Gabana" (LLC "Gabana").

Order N _____ dated ________

LLC REORGANIZATION SERVICES

Show as:

Currently, the reorganization of legal entities in practice has received enormous practical application not only for the creation of large corporations, but also in order to “break up” them into smaller companies that meet all the requirements stipulated by law when they are created on the basis of already existing companies. It is for these purposes that Art. 57 of the Civil Code provides for such forms as division and separation, aimed at disaggregating legal entities.

Division is the procedure for transferring rights and obligations to newly emerged legal entities in accordance with the separation balance sheet. That is, division means the termination of the existence of a legal entity and the transfer of all assets and liabilities to new institutions that arose by decision of the founders and on the basis of the material base of the old enterprise. The separation balance is the basis for determining the property and mandatory complex transferred to new institutions. According to T.P. Shishmareva, in accordance with the parts of the transferred property, the transfer of rights and obligations is carried out. The separation balance is approved by the relevant management body. For an LLC this is a general meeting of participants, for a JSC - shareholders. When this procedure does not provide an opportunity to identify a legal successor, the newly emerged legal entities bear joint and several liability for the obligations of the reorganized legal entity to its creditors.

Division is characterized by the fact that, on the basis of the property of one corporation, two or more others are created, in turn, the reorganized organization is no longer a subject of law.

When carrying out reorganization by division, it must be remembered that there is the possibility of a “mixed” reorganization. “Mixed” reorganization means the division of a legal entity of one organizational and legal form into several legal entities of another organizational and legal form. For example, an LLC is divided into two closed joint stock companies. The legislation does not provide for such a reorganization, but it also does not contain rules prohibiting such division. In practice, this procedure saves time and money for legal entities being reorganized.

A necessary condition for the division is notification of the antimonopoly authority, which is carried out in cases where this determines the creation of a non-profit organization, which includes two or more commercial organizations; if the total amount of assets of the founders exceeds 20 million rubles; if during the division there is a possibility that an economic entity whose share exceeds 35 percent will appear on the market for goods and services, except in cases where the procedure is carried out in accordance with an arbitration court decision that has entered into legal force.

When dividing, you also need to remember in the corresponding notification to creditors and publication in a periodical, which must take place within 30 days from the date of the decision on reorganization. Creditors, in turn, have the right to demand early termination or fulfillment of the corresponding obligations of a legal entity and compensation for losses.

Spin-off is a form of reorganization of a legal entity, in which its existence as a legal entity does not cease, but on its basis one or more companies are created, rights and obligations are transferred to newly emerged legal entities. The property assigned to the previously existing company and the authorized capital are reduced. The entire property composition is determined by the separation balance sheet. Separation is characterized by singular legal succession, in which the successor takes the place of the predecessor only in some legal relations. Considering the procedure for succession during separation, M.N. Ilyushina points out that singular succession allows the reorganized person to retain some of the rights and responsibilities, while the spun-off organization receives certain rights and responsibilities.

Reorganization in the form of separation is a way of creating new legal entities, as opposed to division. Because a reorganized society does not cease to exist.

The practical application of legislative norms on issues of reorganization procedures in the form of spin-off can be observed in the example of spin-off of joint-stock companies.

Law “On Joint Stock Companies” in paragraph 2 of Art. 19, paragraph 3, art. 49 defines the right to make a decision on the allocation for discussion of a general meeting of shareholders, which determines the procedure and conditions for the process, the possibility of converting shares, and approval of the separation balance sheet. The registration authority - the federal tax service - is notified of the decision made, the procedure is reflected in the Unified State Register of Legal Entities. Creditors are also notified of the reorganization. Notification occurs by publishing information in the State Registration Bulletin and by sending registered letters, since in this case it is necessary to comply with the rules regarding the rights of creditors in terms of early fulfillment of obligations under contracts concluded before the decision to begin the reorganization of the company. Submission of claims must be made within 60 days, in contrast to creditors of a limited liability company, where the period is 30 days after the decision is made.

The decision to reorganize the company may contain the following information:

• 1) name, information about the location of each company created through reorganization;
• 2) the procedure and conditions of the reorganization procedure;
• 3) the procedure for converting shares of the reorganized company and the ratio (coefficient) of conversion of shares of such companies;
• 4) a list of members of the audit commission or an indication of the auditor;
• 5) an indication of the sole or collegial executive body;
• 6) instructions on approval of the separation balance sheet;

The issue of conversion of company shares is discussed in clause 2.1 of the Standards for issuing shares and bonds and their prospectuses during the reorganization of commercial organizations, approved by a resolution of the Federal Commission for the Securities Market, and determines the powers of the board of directors. The standards allow that all or part of the shares of the new legal entity may belong to the reorganized company. The founder of the newly formed legal entity may be the reorganized company itself. The law also provides that the full or partial number of shares of the spun-off company may belong to the reorganized commercial organization. The founder of a legal entity formed by way of separation may be the reorganized company itself.

The procedure for transferring rights and obligations to a newly reorganized company is carried out by drawing up a separation balance sheet containing an object-by-object breakdown, a provision on succession for all obligations of the reorganized legal entity, including obligations disputed by the parties. Spin-off implies the transfer of a certain part of the rights and obligations of the reorganized company, the remaining rights and obligations to the reorganized company.

The lack of balance, as well as the lack of provisions on succession, is the reason for the refusal of state registration of newly emerged legal entities. The law provides for the approval of the separation balance sheet by the founders (participants) of the legal entity or the body that made the decision on the separation. If the decision is made at the general meeting of shareholders, then the balance sheet is approved by the meeting. The contents of the separation balance sheet include information on accounting statements prepared for the reporting period - quarter or year, as of the last reporting date, taking into account the comprehensive inventory. As a result, the authorized capital may be reduced by a smaller amount. What is the authorized capital of the created company?

The procedure ends when the corresponding entry is made in the Unified State Register of Legal Entities. Joint stock companies must also register the issue of shares.

Tax legislation also provides for separate rules governing the allocation procedure. Clause 8 art. 50 of the Tax Code of the Russian Federation reveals that “when one or more legal entities are separated from a legal entity, succession in relation to the reorganized legal entity in terms of the fulfillment of its obligation to pay taxes does not arise.” According to paragraph 2 of Art. 23 of the Tax Code of the Russian Federation, taxpayers report reorganization to the tax authority at the place of registration within 3 days from the date of such decision. Reorganization of a legal entity does not change the deadlines for the fulfillment of its obligations to pay taxes by the legal successor.

When reorganizing a limited liability company, issues often arise related to the distribution of overpaid taxes among legal successors. Clause 2 art. 78 of the Tax Code of the Russian Federation provides for a credit or refund of overpaid taxes based on a written application from the legal successor.

Thus, after analyzing the legal norms relating to the division and separation of a legal entity, we can conclude that both procedures have similarities and differences. When reorganization is carried out in the form of division, one organization ceases its activities and several new legal entities are created on its basis, and when separated from the structural units of the main organization, new legal entities are formed, but the organization itself continues to exist.

Carrying out reorganization in the form of separation and division is characterized by the presence of universal succession.

The volume of transferred rights and obligations of reorganized legal entities is determined on the basis of the separation balance sheet, which should also determine the presence of a legal successor for all its obligations.

The main documents when carrying out reorganization in the form of separation and separation are: the decision of the competent authority on reorganization, the separation balance sheet, the constituent documents of new legal entities, changes and additions to the constituent documents of existing or a new edition of such documents, the state registration act.

Recently, the mobile phone market has been agitated by rumors surrounding Motorola. Our resource has repeatedly mentioned in the news about the crisis within the company. However, today we can only talk about one fait accompli - the division of Motorola into two independent companies by 2009. Profit-generating, but smaller from a production point of view, divisions for the production of telecommunications equipment, corporate solutions, etc. will merge to form Motorola Broadband & Mobility Solutions. Unlike Home & Network Mobility and Enterprise Mobility Solutions, the company's largest mobile phone division will be spun off into Motorola Mobile Devices. Actually, it was this that caused the crisis within the company, turning into an unprofitable enterprise and thereby causing discontent among Motorola shareholders. Even last year, when the first signs of the crisis appeared (rapid loss of market share and income), possible ways of development of events were named. More often than others, assumptions were made about the sale of a division to a telecommunications company. Moreover, the rumors even intensified after reports appeared about the future division of the company. In our opinion, it is at least premature to talk about such an option. Firstly, this is due to the scale of Motorola's mobile division, and secondly, the company's amazing ability to overcome the peak of such crises. And there have been many of them over the long history of Motorola.

A little history

In one of our previous materials (“Mobile devices from Motorola - history of development and current state”), the history of the company has already been discussed. Therefore, here it is worth dwelling only on some key points that resonate with the current situation. As you know, Motorola has long remained a leading manufacturer in various fields, ranging from consumer electronics to semiconductor production. Moreover, a significant part of the orders came from US government agencies and the Pentagon. At the same time, the creation of the first cell phone by Motorola (the first call on which was made on April 3, 1973) can be considered a turning point. Motorola's gradual transformation from a government-focused company to a telecommunications giant ended in the last decade. All this was accompanied by various restructurings and - from time to time - large-scale crises. The last such crisis occurred at the beginning of the century. In 2001, Motorola announced that for the first time in 15 years the company suffered losses for the year. As a result, a logical decision was made to restructure the business and reduce costs. Translated from the vague language of press releases, this meant a large-scale reduction of employees (22 thousand people, or 15% of all jobs, by 2001). And also - the curtailment of secondary activities with the closure or sale of the relevant divisions. However, for a long time, until the third quarter of 2002, Motorola suffered losses. Unlike today's situation, not one, but several divisions were unprofitable. For example, semiconductor production, a division for the production of wireless communications equipment, etc. However, the production of mobile phones played a significant role in the crisis. A lot has something in common with the current state of affairs. As today, the division's losses were driven by past successes. “Thanks to” them, the company rested on its laurels, falling out of the evolutionary process of telephone development for some time. The grandson of Motorola founder Christopher Galvin, who took over the company in 1997, was able to take advantage of the phenomenal success of StarTAC. The first mobile phone in the clamshell form factor appeared shortly before and remained a bestseller for several years. However, the further development of Motorola cell phones has slowed down somewhat compared to other companies.

By the beginning of the 21st century, mobile phones had ceased to be just a means of communication. The attention of an increasing audience of users was attracted by various entertainment functions, new phone capabilities such as color screens, polyphony, etc. At this time, Samsung used its favorite method - the competent development of other people's developments and thereby attracting attention to its own products. As a result, in just two years (2001-2002), the market was flooded with many bright Korean folding phones. They attracted users with a variety of functions and designs - “female” folding beds, folding beds with color screens, with a built-in camera, etc. Motorola reacted rather clumsily to market changes. For a long time, the company's phones did not have entertainment functions, as well as options that had become critical for users, such as built-in cameras. And the software content, by the standards of 2001-2002, raised questions. This is where the stories about the inconvenient, illogical menu of Motorola phones originate. It is interesting that this myth is tenacious: even today you can hear similar conversations, although at least two software platforms have already changed (P2K, MOTOMAGX). In any case, the stagnation of the beginning of the century had a negative impact on the mobile division. As a result, the board of directors forced Christopher Galvin to resign from his post. The energetic and ambitious Edward Zander was appointed head of the company. However, history repeats itself. Could the new CEO of the company have imagined that three years later he would find himself in the place of his predecessor? And Motorola, as a result of a monstrous déjà vu, found itself in an even more severe crisis. However, in 2004, everything looked completely different.

RAZR - Motorola's Alpha and Omega

In fairness, it is worth noting that the foundation for future victories was laid by the previous management of the company. Back in 2003, among other anti-crisis measures, preparations began for the separation of Motorola's semiconductor production division into a separate company. Motorola Semiconductor Division was one of the pillars of Motorola. However, despite this, during the crisis the enterprise remained unprofitable for a long time. Ed Zander, upon being confirmed as the company's chief executive officer, oversaw the spinoff of the division into a separate company. This process, which culminated in the formation of Freescale, helped Motorola turn things around. Freescale was subsequently sold in 2006 for a record $16 billion. Moreover, in addition to semiconductors, during Zander’s “directorship” the production of automotive electronics was also allocated and sold. By the way, the process was led by Zander’s successor as CEO, Greg Brown. However, another key decision of the company brought much more obvious consequences for the end user - the launch of the landmark mobile phone Motorola RAZR V3 to the market. This product was also not the initiative of Zander himself. Even before his arrival, the concept of the device was proposed by Geoffrey Frost, a legendary figure for Motorola. In addition to the RAZR idea, when he was marketing director, the famous “three-meter rule” was introduced (it was from this distance that a Motorola phone was supposed to be visible), and the Hello Moto concept was proposed.

But it was Zander who had the honor of bringing the RAZR to the market and building on the success of this landmark device for the entire industry. To be fair, it is worth noting that in addition to the Motorola RAZR V3, other interesting models also appeared on the market in 2004 - the Motorola V300 / V500 / V600 clamshells, one of the first truly musical phones Motorola E398, the fashion rotator Motorola V80, which, however, , never became widespread. All these worthy devices were built on the same software platform - the so-called triplet, since it was first tested on the V300 / V500 / V600 clamshells. The platform was prepared for release on the market for a very long time and was brought to perfection. It is not surprising that it existed on the market for a record time - until 2006. But it was the Motorola RAZR V3 that became a truly iconic model on the market, forming a new direction in the development of phones. Today, when mentioning the RAZR, many people remember its minimal thickness. But this was only one component of success. Another “WOW factor” was the case materials. Motorola has always been an innovator in the design and materials of phones (clamshell and rotator form factors; steel, soft-touch plastic). The Motorola RAZR V3 phone was the first to use anodized aluminum on a large scale. Premium case materials and innovative design are reflected in the price of the phone. At the beginning of sales (autumn 2004), the cost of the Motorola RAZR V3 reached 600-800 dollars, in Russia - over 20 thousand rubles. Despite this, the phone quickly became popular, and not just popular, but phenomenally popular. Unfortunately, Motorola just as quickly became a hostage to its own success. The company's focus on market share has forced Motorola to gradually reduce the prices of its best-selling mobile phone. At the end of sales, the model cost less than 5 thousand rubles. The consequences of such a price rally were quite predictable. The phone lost its premium status (which was even reflected in the included box). However, the company achieved the desired result. Sales of the device increased even more, RAZ-mania reached its apogee. The Motorola V3 phone remained successful for three years, from 2004 to 2006. The company's shareholders were certainly ecstatic - Motorola's market share reached 23%. However, even at the moment of triumph, the company’s product line raised questions. The original Motorola RAZR V3 was rapidly aging. Actually, even at the time of its appearance it was not a functional leader - there was no slot for memory cards, there was only a modest VGA camera, etc. However, later (2006 - especially) the company's lineup consisted mainly of RAZRs of various colors and cosmetic updates to the phone, in particular, the Motorola V3i. The remaining members of the RAZR family, UMTS devices RAZR V3x, V3xx, V6xx, were also secondary to the Motorola V3, mainly due to their similar appearance. Over time, even fans became tired of the popular design, but Motorola continued to churn out all sorts of variations on the RAZR theme. In this case, the same “triplet” platform was used with minor changes in the interface (a different type of menu). The functionality of the emerging models also gradually became secondary in relation to the products of other manufacturers. And the competitors did not sit idly by. The fashion for thin solutions has captured almost all phone manufacturers (Nokia and Sony Ericsson were the latest to react). The most efficient company was Samsung, which took advantage of a proven technique. During 2006, the market was flooded with Korean devices that in one way or another exploited the idea of ​​subtlety. It was Samsung that released the thinnest phones, X820, U100. But most importantly, Samsung's thin phones were functionally superior to Motorola's competitors in most cases, and were often more interesting in appearance. All this had a negative impact on sales of American devices. Motorola finds itself in the same situation it was in five years ago. Gradually, users stopped being interested in design alone; the functionality of image solutions became critical. By 2005, many manufacturers realized the importance of photographic, music solutions, and the presence of smartphones in their product line. Motorola continued to focus on image, leaving functionality secondary. The first phone with autofocus - the Motorola MOTO U9 - went on sale only this year (the Motorola RIZR Z10 - the company's first full-fledged camera phone - is about to be released). Following the successful youth music-background Motorola E398, there was a deafening failure of its redesigned version - Motorola ROKR E1, and cooperation with Apple did not help. The Motorola music solutions segment turned out to be closed to the mass user; truly interesting devices from the ROKR line were released only on the Chinese market. Motorola also managed to screw up the “popularization” of the slider form factor (through the efforts of the same Samsung). The company's first mass-produced device, the Motorola RIZR Z3, entered the market only in 2006 and went unnoticed. After an unsuccessful collaboration between Motorola and the Taiwanese ODM manufacturer of Windows Mobile devices CMCS, the company switched to producing smartphones in-house. However, the interesting QWERTY solution Motorola Q never reached the European user, settling in its native American market. Its successors appeared on the market too late, when competition in the Windows Mobile device segment had intensified significantly. The solutions released by Motorola in most cases remained secondary in relation to the RAZR. The SLVR device lines (models L7, L7e, L9, as well as budget analogues L2, L6), PEBL (U6), KRZR (K1, K3) are not even close to the success of the Motorola V3. Functionally, all these phones did not represent anything new for the mobile phone market. The design solutions used - soft-touch plastic, glass (KRZR K1), chrome surfaces (Motorola L9) - were interesting, but also did not amaze jaded users.

As a result, by 2006-2007, Motorola was far from being the most advanced manufacturer. The fame of the RAZR was slowly fading, but the company was in no hurry to present an adequate replacement for its bestseller.

Prerequisites for the crisis

In 2006, the company's management decided to change its strategy. The idea of ​​fighting for market share was replaced by the concept of increasing margins, income from each phone sold. At the same time, instead of the previous software platform, most of the next generation devices were supposed to use new Linux platforms. However, miscalculations in management led to the fact that these decisions had a negative impact on the company's position and served as one of the reasons for the current crisis. Motorola has long been in second place among mobile phone manufacturers in terms of the number of devices sold. This was due to the large number of ultra-budget and low-cost solutions in the company’s lineup. Due to a change in strategy, the most popular Motorola C-series gradually left the market. However, the expected increase in margins did not materialize. By 2007, Motorola products had lost their premium status; users did not want to overpay for models with outdated functionality and RAZR-like design. As a result of the reduction in sales of phones in the middle and high price segments, as well as the withdrawal of budget phones from the market, a critical situation has developed. Throughout 2007, Motorola began to lose market share catastrophically quickly (from 23% by the end of the year it dropped to 13%). The logical result is that the American manufacturer lost second place in the world “table of ranks” to Samsung. In parallel with the loss of market share, revenue from phone sales was declining just as quickly. As a result, the net loss for 2007 amounted to almost $49 million. An updated product line could improve the situation. However, she... simply wasn’t there! The outgoing P2K phones were supposed to be replaced by mass-produced Linux devices, but a crisis in the company's management led to unreasonably long delays in the entry of a number of models into the market. Some models were completely canceled, for others the positioning and even designations changed. As a result, only a few phones reached the mass user, which form Motorola's scanty lineup today. A case in point is the Motorola Z6. The phone appeared on the market with a long delay. The imbalance of the model range led to constant renaming of the device - initially it was conceived as an image continuation of the company's first slider, Motorola RIZR Z3. Then it was decided to market the phone as a music solution (ROKR line). However, in the end, the prefix MOTO- was added to the name, and the phone went on sale as the Motorola MOTOROKR Z6. At the same time, despite the high-quality sound and the presence of a dedicated player control key, the device can hardly be considered a full-fledged music solution. There is no FM radio, standard 3.5 mm audio jack, normal implementation of hot-swapping memory cards, etc.

Also, a device with a touch screen Motorola MOTOMING A1200e was “transferred” from the Chinese market. Its musical version, Motorola ROKR E6, never made it to Europe. The flagship of the 2007 product line was supposed to be the fashion phone Motorola RAZR2 V8. Announced in the spring along with other clamshells in the line, V9 and V9m, the device is expected to be a development of the ideas of the Motorola RAZR V3. The image charge of the new product was high, as was its functionality (in particular, a huge external screen with a touch area). But the model did not become a breakthrough. Its sales are significant, but are unlikely to reach the scale of the original RAZR. It was not possible to get the company out of the RAZR2 crisis.

Subsequently, the very controversial Motorola MOTO Z8 smartphone appeared on the market - the company's first modern UIQ device (the rush to release did not allow us to solve some of the problems - the next Symbian model - the Motorola RIZR Z10 - looks much more interesting). And also the next late-release models Moto U9, Motorola ROKR E8. All of the above models form the backbone of the company’s modern model range. There is an imbalance in the line, a lack of clearly defined product families, and a leapfrog with names. True, much more interesting devices have been announced (or will soon be presented), in particular, photographic UIQ solutions and other models. However, the new management of the company will be in charge of bringing them to the market.

Is the crisis within Motorola the beginning of the end?

It should be understood that the crisis situation within the company has developed, first of all, due to ineffective management. Motorola management, unable to cope with the decline in interest in the RAZR, was unable to develop a clear plan for further action in a timely manner. The current Motorola products themselves were and remain very high quality in terms of software and hardware. However, the leadership's tossing from side to side gradually led to today's deplorable situation. Alarm bells rang out for Motorola back in mid-2007. At the end of the second quarter, a decrease in turnover was recorded. This was caused by falling sales of the mobile division. As a result, in July 2007, Stu Reed, who had worked at IBM before Motorola, was appointed head of Mobile Devices. The situation could not be corrected; the manager worked in his post for only eight months and left the company in March of this year. It is worth noting that subsequent changes in management have also led to nothing so far. At the end of the third quarter, the situation became even more depressing. Motorola lost second place in the market to Samsung. At the same time, the company’s share decreased by 8% compared to the same period of the previous year. Moreover, the decline was associated not so much with a change in strategy, but with a loss of user interest, a decrease in sales and profits. As a result, there was a backlash. One of the company's largest shareholders, Carl Icahn, in October 2007 announced the need to split Motorola, spin off the mobile division into a separate company and further sell the latter. Motorola tried to correct the situation, but to no avail. Recent acquisitions of various service companies, the purchase of a 50% stake in UIQ Technology, and agreements with other players could only yield results in the long term. Thus, we have yet to evaluate the effectiveness of cooperation with Kodak - Motorola's photo solutions have not yet reached the market. As a result, on November 30 the company announced the departure of the recent “savior” of Motorola, Ed Zander. He was replaced as CEO of the company by another functionary, Greg Brown. A little later, Padmasree Warrior, vice president and technical director of the company, left her post. Subsequently, the situation only worsened. At the end of the fourth quarter and 2007 as a whole, Motorola turned out to be unprofitable, primarily due to the crisis in its mobile division. The company's stock price collapsed, and in the winter of this year, for the first time in a long time, its level fell below $10 per share. All this led to even greater dissatisfaction among shareholders and further changes in the company's management. So, at the end of January, a new chief financial officer, Paul Liska, was appointed to replace Tom Meredith. Interestingly, he had experience in selling various companies and their divisions. Well, on January 31, a statement was made about the issue of business restructuring under consideration, including the possible spin-off of the mobile division into a separate company. All this immediately gave rise to a new wave of rumors about the future of the company and its sale. Thus, in early February, Ericsson representatives announced that the company was considering the possibility of acquiring Motorola's mobile division. At the Mobile World Congress, which was taking place at the same time, Samsung representatives had to disavow such speculation. Later, Greg Brown himself rejected rumors about the sale of mobile phone production. Unfortunately, no real steps have been taken to improve the situation. At the beginning of March, Stu Reed left his post - it was stated that a number of initiatives were associated with him that would be developed in the future. However, behind the colorful speeches there was no concrete plan for overcoming the crisis. As a result, a group of shareholders led by the notorious Carl Icahn wrote an open letter to the remaining shareholders, which spoke of the need to change the company's management. Icahn himself filed a lawsuit against Motorola demanding access to company documents. At the same time, an open letter to the Motorola board of directors from a former employee of the company, Numair Faraz, appeared, in which he spoke unflatteringly about management and offered his thoughts. All this led to a logical outcome. On March 26, the company officially announced the decision of the board of directors to begin the process of dividing into two independent enterprises. The unprofitable mobile division will be separated into a separate company until 2009, and the remaining two divisions will be merged into another company. This decision caused new speculation around the fate of Motorola, as well as subsequent layoffs of the company's employees as part of a large-scale cost-cutting plan. Along the way, new candidates for the purchase of Motorola appeared. On April 1 (not to be confused with the April Fool's joke), a message appeared about the interest of the leading Indian electronics manufacturer, Videocon. A week later, the company sent a formal proposal to Motorola, enlisting the support of investment bank UBS. At the same time, the active Carl Icahn did not let up: on April 8, Motorola agreed to his terms. According to them, two positions on the board of directors will go to the candidates nominated by him. Moreover, Keith Meister, proposed by Icahn, is the executive director of the Icahn Enterprises group and will take the place of Ed Zander, who is finally leaving Motorola, on the board of directors. The latest news from Motorola was the decision to appoint David Dorman as chairman of the board of directors. However, everyone is still waiting for the May meeting of shareholders, which will decide the future fate of the company. Now it’s worth talking about the prospects for Motorola’s mobile division. In the history of the mobile industry there are many examples of mergers and acquisitions of cell phone manufacturing companies. These are Sony Ericsson, BenQ-Siemens, Alcatel and the current owner of the brand, the Chinese TCL, an example from a year ago with Philips and China Electronics Corporation. However, Motorola's mobile division stands out in its scale - after all, it is the third largest player on the market. To be fair, it should be noted that the rumors circulating about the sale of the division are unlikely to turn out to be reality. Even after being separated into a separate company, Motorola Mobile Devices will remain part of “big” Motorola; the sale of the division is optional. Although, according to various sources, there are indeed many candidates for purchase. At the same time, almost all of them, upon closer examination, do not look so convincing. Motorola's mobile division is unlikely to be transferred to cell phone manufacturing companies: there is no point in the leading ones acquiring a weaker brand to gain access to individual local markets (USA, China). Second echelon companies simply do not have the resources to acquire them; moreover, inevitable restructuring may plunge them themselves into crisis. Much more expected is the purchase of Motorola's mobile division by companies that are just preparing to enter the market. But large American corporations and representatives of developing countries (Videocon, Chinese companies) may also face various difficulties. Also called one of the most famous brands - Google. However, Motorola is already part of the Google-led OHA group producing Android devices. In addition, the Internet company primarily promotes the operating system itself, and not ready-made solutions. In any case, Motorola may as well produce Android-based devices as an ODM partner. Still, the most realistic option seems to be for Motorola's mobile division to remain independent, at least until it returns to profitability. The first steps in this direction are already visible: a sharp reduction in costs (closing a number of production facilities, large-scale layoffs), the emergence of ODM solutions under the Motorola brand, which are designed to fill the vacuum between the finalizing of their own devices. Thus, in April there was a message about the supply of inexpensive 3G phones by Qisda. It's a small world, because Qisda was previously known as BenQ Mobile, all that remains from the alliance with Siemens. By releasing truly high-quality solutions that are interesting to users in the second half of the year, Motorola can gradually improve the situation. Previously concluded alliances, agreements, and acquisitions of various companies related to services must be “fired.” Already today there are examples of the implementation of services in the company’s phones - ShoZu, ZuCast, etc. In any case, the near future will show in which direction Motorola will move.

Results

Despite the dire situation, all is certainly not lost for Motorola. Spinning off the mobile phone division into a separate company does not mean selling it. After the restructuring, Motorola Mobile Devices will remain “under the wing” of the parent company. And even if a hypothetical sale or merger deal with any telecommunications company takes place, in any case, the Motorola brand, as well as the achievements of its engineers, will be used for a long time. However, even as an independent company, Motorola's mobile division has a chance to become profitable again. Cost reductions that are already happening internally will reduce the division's losses. Although at the same time the staff will be short of a certain part of the staff, including engineers and programmers. “Draining” the structure, focusing efforts only on key areas can help the company become more flexible and dynamic, albeit on a smaller scale. The expected appearance of really interesting phones in the second half of the year could bring back the user audience. With a small but interesting, in-demand product line, Motorola's mobile division, even with its current small market share, can become profitable again. Suffice it to recall the example of Sony Ericsson in 2002-2003: despite small production capacity and a small market share, the company then became profitable thanks to an excellent model range, built on the basis of a small number of ultimate solutions. Motorola can be helped in this process by its numerous recent acquisitions and agreements: with UIQ Technology, Kodak, Qualcomm, etc. Already in current models there are examples of the use of services relevant to today's user. For example, the photo blogging function in the Motorola RIZR Z10. All this, under certain conditions, can really help the company improve the situation. And the last, purely subjective remark - many would not like Motorola to leave the market as an independent entity. After all, this is a symbol of the mobile industry, the living history of cell phones.