Motorola Merges Cable, Wireless Network Units
Combined Entity Would Have Had $9.2B in 2006 Revenue
By Todd Spangler -- Multichannel News, 7/18/2007 12:05:00 PM
Two months after adding “mobility” to the name of its cable group, Motorola said Tuesday that it folded its wireless-service-provider unit into the former Connected Home Solutions division.
The move, disclosed in a Securities and Exchange Commission filing, creates an operating unit more than double the size of Connected Home Solutions. Dan Moloney remains president of the Horsham, Pa.-based Home and Networks Mobility group. As a combined entity in 2006, it would have had $9.2 billion in revenue, compared with $3.3 billion for Connected Home Solutions alone.
Motorola “realigned its operations, as of the second quarter of 2007 … to better align its operations with the evolving nature of our customers and served markets,” the company said in its SEC filing.
In addition to digital set-tops, video-headend equipment and voice and broadband products, Home and Networks Mobility now includes Motorola’s public-networks business, formerly included in the Networks and Enterprise segment, which sells equipment to cellular-phone providers including Sprint Nextel and Verizon Wireless.
As part of the reorganization, Motorola established the Enterprise Mobility Solutions group, which includes the public-safety-radio business and enterprise wireless businesses. The group will also subsume recently acquired Good Technology, a developer of mobile-communications software, which was previously part of the Mobile Devices group.
The moves mark the second big restructuring for Motorola in two years: In March 2006, the company created the Networks and Enterprise unit by merging its wireless-service-provider and two-way-radio businesses.
The company did not say whether Tuesday’s reorganization would result in layoffs, but Motorola already announced plans to eliminate about 7,500 jobs, or 11% of its work force, this year.
As a whole, Motorola has been suffering in recent quarters due to weakness in the mobile-handset business, the largest of its three groups, with $28.4 billion in sales last year. Last week, the Schaumburg, Ill.-based company said results for the quarter ended June 30 would be at least $700 million below expectations -- in the range of $8.6 billion-$8.7 billion, compared with previous guidance of about $9.4 billion.
“For a company under a lot of pressure, it shouldn’t be a surprise that they’re doing this,” Pali Research analyst Walt Piecyk said.
Motorola’s overall margins will continue to be driven by the handset unit, Piecyk noted, and the reorganization “doesn’t fix that issue.” But, he added, “They’re thinking that a reorganization will give them a fresh approach to the business.”
Motorola may or may not realize any synergies from combining the cable division with the wireless-infrastructure group, Piecyk said, adding, “Given that you’re going to be able to play back your DVR [digital-video recorder] from a handset, maybe it makes sense to bring those groups together, but I don’t know whether it will make any real difference.”
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