| On 11.12.09, In Uncategorized, by Nidhi |
The New York Times reports that Motorola which has said that it wanted to split into two separate companies is now planning to split into three. This is to raise the cash so that they can pay down their debts.
The company 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.
Last year, Motorola 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.
“Even if it sells the set-top box and communications equipment unit, the company would still likely separate the two remaining divisions,”said Cusik
Still Motorola has high hopes for turning around its cellphone business. It recently introduced two smartphones, including the Droid, which is being promoted by Verizon Wireless. Motorola promises more and more smartphones in the coming year. Motorola got into the cable box business in 2000, when it acquired General Instruments for $17 billion.Their main rival was Cisco systems which made their business go dimmer. Since videos are delivered over internet these days, the demand of traditional cable TV also went down. This might be another factor which made their business go even more dimmer.
The unit up for sale, which Motorola calls home and network mobility, posted an operating profit of $199 million in the quarter ended Oct. 3, down 24 percent from the year earlier. The unit’s revenue fell 15 percent, to $2 billion.
Mr. Cusick said it is not clear that there are other companies that would want to own both the cellular and cable product lines. Other telecommunications equipment providers, like Ericsson, might be interested in the wireless products. And there are some smaller vendors to the cable industry, like Arris Group and Pace, that might try to put together a deal to buy the set-top box business, he said.
Motorola’s bankers are also approaching private equity firms, including TPG and Silver Lake Partners. The company is not expected to begin the separation process, however, until the finances of the handset unit stabilize, perhaps in mid-2010.
Source: http://www.nytimes.com/
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