Motorola Inc. has announced it would break up into two distinct units with one making networks and telecommunications equipment and the other making handsets and home entertainment products.

Motorola SpinCo Holdings, a newly created company that will carry out the reorganization, revealed in a Form 10 Registration Statement filed with the U.S. Securities and Exchange Commission that the company will be renamed Motorola Solutions and the spin-off business will be known as Motorola Mobility.

Motorola Solutions will retain the Enterprise Mobility Solutions and Networks division of Motorola Inc. with co-CEO Greg Brown running the unit. Motorola Mobility will be the new company for the Mobile Devices and Home Division with co-CEO Sanjay Jha as head.

Motorola , which is based in Schaumburg, Illinois, plans to complete the reorganization by the first quarter of 2011.

Weak sales since 2007 and a $3.9 billion debt as of the first quarter of 2010 have prompted the reorganization. Motorola Inc. faced tough competitions from iPhone maker Apple Inc. and Black Berry maker Research in Motion. Its set-top box and wireless network equipment businesses were also hit hard by the weak economy and consolidation by telecommunications operators.

Motorola Mobility aims to revive sagging sales and regain market share with its Droid and Droid X smartphones as well as extensive demand for wireless broadband services.