Motorola Shuffles Deck

8/01/2008 8:00 PM Eastern

Motorola realigned its Home & Networks Mobility segment into three product groups, a move that will put cable consumer-premises equipment and broadband-access gear into separate units.

Under the new structure, the data and video CPE products group — called Broadband Home Solutions — will be headed by John Burke, who previously was senior vice president and general manager of digital video solutions.

The two other groups are the Broadband Access Solutions and Cellular Networks businesses. Motorola said there were no layoffs associated with the restructuring.

Splitting Wires
Motorola reorganized the Home & Networks Mobility segment into three units:
SOURCE: Motorola
Broadband Home Solutions: Cable and IPTV set-top boxes, DSL and cable modems and gateways, femtocell gateways.
Broadband Access Solutions: Wireless/mobile and fixed broadband technologies including WiMax, LTE, cable access and gigabit passive optical network equipment.
Cellular Networks: CDMA, GSM/UMTS, iDEN and CORE products.

“This organizational change will ensure Home & Networks Mobility remains agile, focused and ideally aligned to realize its growth potential,” the company said in a statement.

The changes come as Motorola proceeds with plans to split into two companies, effectively spinning off the money-losing mobile devices unit. Last week, Motorola said it expects to complete the spinoff in the third quarter of 2009.

Motorola created Home & Networks Mobility in May 2007, merging its wireless-infrastructure unit into the former Connected Home Solutions division. The operating unit, headed by president Dan Moloney, is focused on all network service-provider customers.

The company’s rationale for combining the disparate groups was that more service providers are building and operating both wireline and wireless networks.

That’s true among major telcos, as well as cable operators, as evidenced by the Clearwire joint venture recently formed with Sprint Nextel, Comcast, Time Warner Cable and others.

Now, with the latest restructuring, all of Motorola’s data access technologies will be under the Broadband Access Solutions umbrella, which includes optical networking, WiMax and LTE products.

Moloney on an interim basis will be in charge of the Broadband Access Solutions business. Dan Coombes, who was senior vice president for wireless broadband networks, will become an adviser to Moloney.

The Cellular Networks group, led by Fred Wright, previously senior vice president for cellular networks and WiMax, will comprise traditional cellular network equipment sold to telecom carriers.

Analysts suggested that by dividing up Home & Networks Mobility, Motorola would have the flexibility to sell those individual units.

“This opens the way for a reverse spinoff, in which everything but the handset business is sold,” Oppenheimer & Co. analyst Ittai Kidron told The Wall Street Journal.

Home & Networks Mobility continues to perform well for Motorola. For the quarter ended June 30, the segment’s sales were $2.7 billion, up 7% from the year-ago quarter, and operating earnings were $245 million, up 28%.

The Broadband Home Solutions CPE unit had record sales, Motorola said — led by shipments of 4.9 million digital entertainment devices, including high-definition set-tops and digital video recorders.

Meanwhile, the Mobile Devices segment continued its downward spiral, with sales of $3.3 billion, down 22% from the year-ago quarter, and an operating loss of $346 million.

Overall, Motorola reported quarterly revenue of $8.1 billion and net income of $4 million, beating previous expectations of a small loss.

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