Motorola Merges Enterprise, Networks Businesses

Updated: The handset and wireless infrastructure specialist combines its enterprise mobility business with its networks and government operations.

Motorola on March 3 announced plans to reorganize some of its operations, combining its enterprise mobility business unit with its networks and government division.

Under the terms of the plan, few details of which were made public, the company said it will form a single entity spanning its corporate, government and networking businesses, dubbed as Motorola Networks & Enterprise.

Company officials did not immediately indicate whether or not the merger of the internal units would result in any job cuts at Motorola, the worlds second largest maker of mobile handsets, which also has a substantial wireless infrastructure business. Prior to the announcement, the company had maintained four individual business units, including divisions focused on mobile handsets and consumer broadband services, in addition to the two newly joined operations.

Ed Zander, the former Sun Microsystems president who took over as chief executive at Motorola in 2004 and has been aggressively pushing to widen the companys profit margins, said the merger of the two units makes sense in terms of bringing together groups marketing the same types of technologies to different customers.

"This reorganization will allow us to strengthen our position in providing end-to-end network infrastructure solutions to private, public and enterprise customers worldwide," Zander said in a statement. "The new business also will leverage key current and next-generation technologies across those various market segments."

With a more streamlined corporate structure, Zander said, Motorola will have the ability to shift its business strategies faster, improve internal cost structures related to general and administrative activities, and be more effective in meeting the needs of customers.

As part of the reorganization, Greg Brown, who had been serving as the president of Motorolas Government & Enterprise Mobility Solutions business, will head up the new Networks & Enterprise division and report directly to Zander. Adrian Nemcek, who had been leading the firms Networks business for more than five years, will retire from Motorola later this year. Specifically, the company said Nemcek will assist Brown in forming the combined organization until the end of the second quarter of 2006, after which he will assist Zander with special initiatives.

Motorola said that it would report its first quarter 2006 earnings under its current four-business-unit structure, after which the company will be reporting its results in three segments: Mobile Devices, Networks & Enterprise and Connected Home Solutions.

In Motorolas 2005 earning report, the Government & Enterprise Mobility Solutions business accounted for 18 percent of the companys overall sales, while the Networks unit contributed 17 percent of total revenue. The two business units account for just under half of the companys 69,000 employees.

Nemcek, 58, company officials said, has been working at Motorola for over 30 years and made the decision to retire on his own.

At the heart of the decision to undergo the business merger, said Motorola representatives, was the desire to bring the firms operations closer together to take advantage of common goals and opportunities.

Having the ability to serve more business customers, including government clients, from one entity, rather than two, made sense for obvious reasons, he said.

The move marks the latest in a series of steps taken by Zander to help unify Motorolas operations since taking over as CEO. In December 2004, Motorola moved from six business unit down to four, spinning off its semiconductor business under the name Freescale, and splitting up a division that marketed automotive electronics and embedded technologies across its other operations. Zander also worked to create one common supply chain system for Motorola in 2004.

Over the last year, the CEO has emphasized his goal of making Motorola into the premier vendor of "seamless mobility" technologies, or products that allow businesses and consumers to integrate more wireless devices and services into their daily lives with a minimal need for work on their part to make those tools work together.

However, it is believed that earlier this year Zander shifted his outlook slightly, telling his executives to focus more on bringing new innovative products to market and creating better ties between the companys various divisions.

At least one analyst labeled the merger of the enterprise, government and networks business as a sound move if Motorola is indeed intent on getting bright new ideas out of its labs and into customers hands, and presenting business and government customers a united organization to deal with.

"Motorola is one of the leading government networking providers, and given that some of their competitors like Cisco and Nortel have already combined government and enterprise operations, this is a smart step to align things tighter internally to deal with that and market new products to existing customers," said Ellen Daley, analyst with Forrester Research.

Daley pointed out that Motorolas government group, for instance, has its Motobridge communications interoperability platform, which could find demand among very large businesses, such as oil companies, trying to patch together disparate systems.

In terms of innovation, Daley said that Zander has already done a good job of trying to push new ideas from Motorolas research operations directly into its product lines. The added integration between business units should only help to that end, she said.

"Motorola is doing a great job in its handset business, but it has some need to push other businesses, such as government, especially in terms of marketing," said Daley.

"The companys biggest issue before Zander came on board was a lack of communication internally, and this is another example of how hes trying to improve those elements of the business."

Editors Note: This story was updated to include comments from analysts.


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