Rumors swirl over Motorola and Nortel

By Roy Mark  |  Posted 2008-02-11 Print this article Print

While Motorola talked WiMax, the Wall Street Journal reported Feb. 11 Motorola and Nortel Networks were considering combining Motorola's Home and Networks Mobility Division with Nortel's wireless infrastructure division. Nortel would run the new unit, according to the newspaper. The combined units generated approximately $10 billion in sales last year.

Featuring television set-top boxes and modems, Motorola's home and networking unit increased sales by 11 percent to $2.7 billion. Earnings, though, fell 14 percent to $192 million.

The deal, according to the Journal, would not include Motorola's handset unit, which accounts for about half of Motorola's revenue. The unit has taken a beating over the last year as Motorola fell to number three in worldwide sales, falling behind market leader Nokia and Samsung.

Neither Motorola nor Nortel returned telephone calls from eWEEK seeking comment.

The poor sales of handsets prompted billionaire investor Carl Icahn, who controls about 5 percent of Motorola's shares, to threaten to lead a board takeover and dump the struggling cell phone unit.

Motorola reported it shipped 40.9 million handset units in the fourth quarter, a dramatic drop from the 65.7 million units shipped a year ago. Motorola's Mobile Devices segment sales were $4.8 billion, down 38 percent compared with the year-ago quarter.

The operating loss was $388 million, compared with operating earnings of $341 million in the year-ago quarter. For 2007, sales were $19 billion, a 33 percent decrease compared to 2006. The Mobile Devices unit also incurred an operating loss of $1.2 billion, compared to operating earnings of $2.7 billion in 2006.

Overall for 2007, Motorola suffered a net loss of $49 million, or 2 cents per share. A year ago Motorola posted a profit of $3.67 billion. Revenue declined 15 percent to $36.6 billion from $42.8 billion. 


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