Nokia Siemens Networks had agreed to acquire Motorola's wireless network infrastructure assets for $1.2 billion. Nokia Siemens executives indicated in a conference call that the deal will increase the company's customer leverage.
Nokia Siemens Networks will buy
Motorola's wireless network infrastructure assets for $1.2 billion, in a deal
expected to close by the end of 2010. The news seems the next logical step in
Motorola's long-running quest to split into two independent and publicly traded
companies during the first quarter of 2011.
The deal would allow Motorola to
divest a unit that builds equipment for GSM, CDMA, WCDMA, WiMAX and LTE
networks, while adding considerably to a war chest
for its upcoming split. One of the resulting companies will encompass
Motorola's Mobile Devices and Home Units, with the other combining the
Enterprise Mobility Solutions and Networks units.
The $1.2 billion will also help
fuel Motorola's struggling smartphone business. Since
the deal is anticipated to close by the end of the year, the payment will be to
Motorola as a singular entity, as opposed to the split companies. According to
an April 29 report from research firm IDC, the company recently dropped from
the top-five list of worldwide cellphone vendors, and
its Motorola Droid X has earned strong reviews
, competitors such as HTC and
Samsung are crowding the marketplace with their own top-quality devices.
The incorporation of Motorola's assets will make Nokia
Siemens Networks, a joint venture of Nokia and Siemens AG, the third-ranked
wireless infrastructure vendor in the United States, and it
will inherit relationships with dozens of operators. Motorola and Nokia
Siemens Networks claimed in a joint July 19 press release that the deal will
strengthen the latter's relationships with China Mobile, Clearwire, KDDI,
Sprint, Verizon Wireless and Vodafone.
"The deal is about scale and building our presence in some
key regions," Rajeev Suri, CEO of Nokia Siemens
Networks, said during a July 19 conference call. "We expect to gain an
incumbent position with many new customers," he added, such as Verizon.
During the conference call, Suri suggested there would be no
layoffs resulting from the agreement. His company will also gain several large
In a July 15 research note to investors, Gleacher &
Company analyst Mark McKechnie suggested that Motorola could profit from its
embracing of Google Android, particularly when it comes to shipments of the
Motorola Droid X.
"We have an upward bias to our 2.5 million and 3.4 million
unit forecast for [the respective second and third quarters of
2010]," McKechnie wrote in that note. Factors for that growth
include "increased Droid demand due to Verizon Wireless marketing and
Incredible shortages" as well as "the Droid X launch to Verizon
July 15 and ... a continued ramp into China."
The Motorola Droid X features a 4.3-inch display, an
8-megapixel camera and a 1GHz processor, and can be used as a mobile hotspot
for other devices. It retails for $199.99 with a $100 mail-in rebate with a
two-year customer agreement.