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The breakup of Motorola became effective Tuesday: Motorola Mobility (NYSE:MMI) gets cellular handsets and set-top boxes, Nokia Siemens gets the cellular infrastructure business, Motorola Solutions (NYSE:MSI) gets government and industrial radio clients, and Sanjay Jha gets to be COO.

The split brought a nice day-one stock bounce of 9.5% for MMI and 6.6% for MSI.

On one level, it marks an ignominious end for the company that invented the handheld cellphone. It also clears the way for one or both of the companies to be gobbled up by bigger companies — no small concern, given that Carl Icahn owns $2b worth of shares and (as always) wants to maximize his own short-term return rather than build a long-term winner.

It didn’t have to come to this: Motorola was the world leader in handset sales as late as 1997 and second until 2007, when it still led the U.S. cellphone market. However, it was late in shifting to digital and to software. (By comparison, the infrastructure business was never able to master the complexity of telephone switching and became uncompetitive once mobile radio technology diffused throughout the industry.)

Its handset business has been losing money for many years. As announced in March 2008, the handset spinoff was an attempt by CEO Greg Brown to dump the losing handset business after being unable to sell it. Even with its recent improvement, its survival is by no means certain.

Motorola co-CEO (now MMI founding CEO) Jha deserves full credit for the turnaround over the past 30 months, in large part for his bold decision to bet the farm on Android. It’s too soon to say whether the turnaround is permanent, as MMI faces brutal competition in all the major categories where it competes: U.S. market, smart phone market, Android handset market and even for Verizon’s (NYSE:VZ) loyalty (with the iPhone LTE due soon).

Still, it’s a good move for Jha, who as COO of Qualcomm (NASDAQ:QCOM) was going to grow old waiting two or three decades for Paul Jacobs to retire. Very few Qualcomm execs seem to want to leave the mothership — whether it’s because of the weather, lifestyle, or gross margins, I don’t know.

His gamble to move back east has certainly paid off. Even if MMI is unable to pull it off, he will certainly be snapped up by another tech company. Exhibit A: Eric Schmidt, who jumped from the sinking Sun Microsystems ship to become CEO of Novell and — without fixing its intractable problems — got named CEO of Google (NASDAQ:GOOG).

One unresolved question: Will MMI keep set-top boxes? The former General Instruments (with major operations in San Diego, thanks to the Linkabit Videocipher spinout) accounts for about one-third of its revenue, but there are few obvious synergies. Now that Cisco (NASDAQ:CSCO) owns its main competitor, Scientific Atlanta, there’s no obvious exit strategy, but I imagine finding a home for the STB business will be one of Jha’s 2011 priorities.

Source: Motorola Splitting Its Way to Greatness?