An Associated Press reporter holds the Droid X, the latest addition to Motorola Inc.'s smart phone line, during a product review in San Francisco. - AP

Motorola begins company breakup

CHICAGO — Motorola Inc. is selling its wireless networks unit to Nokia Siemens Networks for $1.2 billion in cash, a move that will accelerate the Schaumburg, Ill.-based company's planned breakup into separate businesses.

The deal, announced Monday and expected to close at the end of 2010, will boost Nokia Siemens' standing in key markets such as the U.S. and Japan, while allowing Motorola to devote more attention to its enterprise mobility unit, which makes communications equipment for public safety agencies and industrial companies.

"We talked to a few different potential acquirers, but Nokia Siemens made the most sense financially, strategically and from a people and culture standpoint," Motorola co-Chief Executive Greg Brown told the Chicago Tribune in an interview.

Motorola said it expects about 7,500 employees in the U.S., China and India to transfer to Nokia Siemens when the deal is finalized. No layoffs are planned, Nokia Siemens CEO Rajeev Suri said in a Monday conference call.

Motorola is keeping $150 million in accounts receivable. It is also retaining its iDEN business, which makes a proprietary technology used in Sprint Nextel's push-to-talk network. The iDEN business represents about $400 million in annual revenue, Brown said during the call.

In addition, Motorola is retaining substantially all patents related to its networks business, with the deal giving Nokia Siemens a cross-license to access that intellectual property portfolio.

Motorola is in the midst of splitting into two independent, publicly traded companies in the first quarter of 2011. The mobile phone and television set-top-box units will form one company called Motorola Mobility under co-CEO Sanjay Jha. The enterprise mobility and networks businesses were to form the other company, called Motorola Solutions and headed by Brown.

Motorola Solutions now will consist of just enterprise mobility. In the conference call, Brown said the sale of networks would allow his team to "further sharpen the strategic focus of our remaining Motorola Solutions business."

Brown said during the call that he is not working on any more divestitures, indicating Motorola will not be conducting further asset sales before the separation in early 2011.

The networks business was profitable in 2009, earning $366 million, even as sales dropped to $4.1 billion from $5.2 billion in 2008. Brown had said his goal with the networks unit, which lacked the scale of Nokia Siemens and such other rivals as Chinese company Huawei, was to manage the business for cash and earnings. In contrast, enterprise mobility was the best-performing unit at Motorola in 2009. It posted net earnings of $714 million on sales of $7 billion.

Brown acknowledged these differences between enterprise mobility and networks, saying during the call that keeping the two units together had somewhat muddied "the investment story" for the company. Now, with enterprise mobility left on its own, the post-split Motorola Solutions company will be a "pure play" for investors, he said.

Share This Story