May 09, 2006
Motorola combining networks
Motorola is combining its network equipment business with its government and corporate unit in a bid to cut costs and win new business.
The network unit sells equipment that runs mobile phone networks, a segment that analysts say has become cutthroat because of too many suppliers. The other business sells wireless gear such as walkie talkies and repeaters to government and large business clients.
Motorola did not give details about how the combination would help with costs, but said it plans to provide information on the reorganization and related expenses at a later date.
One analyst said the move appeared to make sense but that it was still unclear how much savings it would produce.
"I believe it makes sense because it eliminates the duplicative research and development between the two divisions," said Oppenheimer analyst Lawrence Harris.
"The technologies and the pursuits of the two divisions have been coming closer together because the government unit has been pursuing bids to sell network equipment to public safety agencies and state governments," he said, noting that they previously focused more on selling walkie-talkie radios.
In the fourth quarter, government and enterprise clients represented 17 percent of Motorola's revenue, and the unit increased sales by about 8 percent from the year-earlier period.
The networks business contributed about 14 of fourth-quarter revenue but fell 4 percent from a year earlier.
Motorola said it would stop reporting both segments as separate units after the current quarter.
Posted by WalkieMan at May 9, 2006 02:57 PM