Motorola plans to split in two next year

Motorola Inc. will split in two in the first quarter of 2011, combining the mobile-phone and set-top box divisions into one publicly traded company and the enterprise mobility and networks units into a second business.

Sanjay Jha, now head of the handset business, will be the chief executive of the mobile phone and set-top box company, Schaumburg, Ill.-based Motorola said Thursday. Greg Brown, co-CEO of Motorola, will head up the other business.

Motorola had delayed a planned spinoff of the handset business in October 2008, amid the global recession. The company, which has lost market share to rival handsets such as Apple’s iPhone , is betting that a combination of the two consumer-focused businesses will win back customers.

The separation will occur through a tax-free stock dividend of shares in the new companies to existing shareholders. Both companies will be “well capitalized,” , Motorola said.

The mobile devices and home business will own the Motorola brand and license it free of royalties to the enterprise mobility and networks businesses.

Motorola climbed as much as 4.5% to $6.95 in late trading after closing up 2 cents to $6.65.