Motorola could be ready to consider the break-up plan long advocated by Carl Icahn, the activist investor as the company's new chief executive moves to halt plummeting profits, it is claimed.

Mr Icahn, who owns about 3.3 per cent of the company, says that breaking up the telecoms giant would unlock almost $20 billion in additional shareholder value. That would equate to about $8 a share on a stock that is currently trading at about $16.

Former chief executive Ed Zander had successfully resisted Mr Icahn’s campaign to win a board seat, but was forced to step down this month in the wake of dismal financial performance.

His successor Greg Brown, the former operating officer, is seen as more open to a deal.

When the subject of a possible break up of Motorola was raised at an investment conference last week, Tom Meredith, Motorola’s acting finance chief, said Motorola could remain whole but added: “A change in circumstance sometimes requires a change in action. So I will leave it at that."

In October, Motorola reported a 94 per cent fall in overall third-quarter profits.

Analysts, meanwhile, broadly agree with Mr Icahn’s figures in theory, but are nervous over whether buyers could be found in the present credit crunch to buy the parts of Motorola’s business that he would spin off.

Motorola has three divisions. The high-profile mobile handset manufacturing arm accounts for about half of group revenues but has suffered heavy losses after sales of its Razr phone collapsed.

Mr Icahn argues that the two lesser-known units – a business that makes commercial radio systems and a division that makes telecoms-network infrastructure and TV set-top boxes – are worth $29 billion.

When added to the $4 billion cash-pile Motorola carries on its balance sheet that sum comes close to the company's current stock market value.

That means the handset business is currently valued as worthless, Mr Icahn says. He believes it could be sold for the value of its annual revenues – or about $20 billion.

"The point is that if the handset business was spun off, with over $20 billion in revenue in a growing industry, it is obviously worth a great deal more than zero," he told The Wall Street Journal.

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