Nortel has already collapsed into bankruptcy protection while Motorola
simply keeps collapsing with its stock price currently just a few ticks
above its 52-week low. The ongoing woes of the former tech titans is
now drawing the attention of private equity firms, according to rumors
swirling around the Internet.
According to the Financial Times,
at least two private equity firms are investigating the possibility of
buying Motorola's failing handset unit and combing it with assets
cherry-picked from telecommunications supplier Nortel's bankruptcy
proceedings. Quoting an unnamed source "with knowledge of the
situation," Advent International is seeking partners to take over
Motorola's handset division as well some Nortel units.
Advent International is a global buyout firm with offices in 15 countries on four continents. The firm focuses on international
buyouts, strategic restructuring opportunities and growth buyouts in
five core sectors. Since its founding in 1984, Advent has raised $24 billion in private equity capital and,
through its buyout programs, has completed more than 250 transactions
valued at more than $40 billion in 40 countries.
The Financial Times story
claims CVC Capital Partners, another global private equity and
investment advisory firm, was approached by Advent International to
pursue a deal combining assets from Motorola and Nortel. CVC declined
to participate in the deal.
A year ago, Motorola announced it planned to spin off its ailing handset
division, but the economy went south and the crumbling credit markets rendered
the grand plan moot. Faced with hard reality, Motorola began cutting jobs,
axing approximately 3,000 workers in the fourth quarter of 2008 alone.
Then things really turned bad. The job cuts didn't stanch the bleeding and
sales continued to tumble, with once-proud Motorola falling to fourth place
among handset makers behind market leaders Nokia, Samsung and LG.
Motorola took the next inevitable step Jan. 14, announcing that another 4,000
employees—3,000 in the handset division—would be given immediate pink slips.
Sanjay Jha, the co-CEO
of Motorola who
was brought in from Qualcomm in August to lead the now failed spinoff,
said in January he hopes a commitment to and a leap of faith with
Google Android and Microsoft Windows
Mobile as Motorola's future operating systems will turn the tide for the
company. Jha said in October 2008 that Motorola would ditch at least four
operating systems, including Symbian, to focus on developing mid-tier phones
running Android and high-end enterprise devices operating on Windows Mobile.
The problem for Jha and Motorola is the transition will take some time. Jha
predicted it would take until the third quarter of 2010 to bring out a Windows
Mobile phone targeted at enterprises and probably until the 2009 Christmas season
before a Motorola-built Android phone could hit the market.
Meanwhile, the private equity firms are circling.
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