Report: Beleaguered Motorola exploring breakup into 3 companies to raise cash and pay down debt

Apple Online Store“Motorola, which has said it wants to split into two separate companies, is exploring a three-way split instead in order to raise cash and pay down debt,” Saul Hansell and Michael J. de la Merced report for the New York Times.

Motorola “has hired JPMorgan Chase, Centerview Partners and Goldman Sachs to seek buyers for its division that manufactures set-top boxes for cable television companies and radios to go into cellphone transmission towers, according to people briefed on the matter,” Hansell and de la Merced report. “These people, who requested anonymity because they were not authorized to discuss the process, cautioned that it was still in its early stages and may not lead to a deal.”

Hansell and de la Merced report, “Last year, Motorola, based in Schaumburg, Ill., said it wanted to separate its struggling cellphone handset unit from the rest of the company, which includes a third business unit that sells two-way radios to businesses and government agencies.”

Full article here.

Eric Jhonsa writes for The Motley Fool, “With $2 billion in revenue and $199 million in operating income last quarter, Home & Networks Mobility is probably the most valuable piece of Motorola’s blemished empire.”

“The proceeds that Motorola would receive from the sale—The Wall Street Journal reported a $4.5 billion price tag—could allow the company to pay down its $3.9 billion in debt and prop up its sputtering mobile phone division, whose estimated 4.7% market share last quarter is a fraction of what it possessed a few years back,” Jhonsa writes. “It’s been suggested that afterward, maybe in 2011, Motorola would also divest itself of its Enterprise Mobility division—a profitable, stable business that makes secure two-way radios, bar code readers, and corporate Wi-Fi equipment, among other things. Motorola might also sell this division for cash, or, with its balance sheet in good shape, do a traditional spinoff/IPO for its shareholders.”

Jhonsa writes, “Either way, Motorola shareholders would be in much better shape than they are right now. Instead of the current mess, they’d be invested in one or two companies with healthy balance sheets, whose management teams weren’t distracted by unrelated businesses. It’s just a shame that Moto waited until the 21st century to take these steps.”

Full article here.

MacDailyNews Take: Just 30 months ago, in May 2007, Motorola’s then-Chairman and then-CEO Ed Zander boasted that his company was ready for competition from Apple’s iPhone, due out the following month. “How do you deal with that?” Zander was asked of the iPhone that Steve Jobs had unveiled in January. Zander quickly retorted, “How do they deal with us?”

[Thanks to MacDailyNews Reader “Edward W.” for the heads up.]

14 Comments

  1. Didn’t Carl ICahn finally dump all prospects of Moto because the board refused listen to his advice about dumping the cellular division?

    Now that he’s gone, they’re going to do just that, huh?

  2. Uh, Bubbles . . .

    The G5 was IBM’s baby. Motorola produced the G4. Which BTW had an even worse failure-to-produce the GHz they promised and putting even more egg on the face of Steve Jobs than the G5 did.

    G5’s biggest failure was being too hot! Forcing Apple to spend a ton of R&D;on a desktop with a complicated cooling system as well as forcing Apple’s laptops to stay with the G4. (I have both)

  3. What a shame. Motorola was at one time a huge innovator. An American giant. Such a shame they drove it into the ground.

    Let this be a lesson to every CEO.

    Never stop building great products. Never stop innovating. If you don’t know what makes a great product, you shouldn’t be in that job.

    The top levels of our great companies are filled with too many accountants and too many lawyers. Not enough product people. Ironically with all those accountants at the helm they still end up going under in mountains of debt. What’s the point of letting a numbers person run your company if they don’t understand basic math?

  4. I believe that at one time Apple announced they were coming out with 500 mhz G4 Power Macs, then they had to back up and admit they only had 400mhz G4s because Moto couldn’t fab the 500 mhz versions as they had promised.

  5. Yeah.
    I think the failures of Motorola and IBM to produce promised products, and their inability to deliver production quantities were the ultimate reason why Apple finally went with Intel. I think they feared a partnership with AMD would have delivered more broken promises.
    My family has owned fine Motorola products for over sixty years. I’m sorry to see their greatness fade.

  6. I love my Motorola cell phones, and I love my Motorola DVR. I wish that Motorola would have worked better on the PowerPC, and kept Apple happy, but frankly, they have been so stagnant these last few years, falling back on, and depending on their older design concepts that they sort of have it coming.

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