The new deal to break Motorola into two companies was announced just as we closed our last issue, and since, given the size and importance of Mobile World Congress, this week’s issue is mostly about mobiles, we thought we should at least pay the story a brief visit.
The gist of the announcement is that it can happen about a year from now, and that the two major businesses that will be thrown together will be the mobile device and the Home business. This is over a year’s delay and a completely new combination of businesses.
The Home business used to be part of Home and Networks Mobility and its results were disguised from the public by combining them with the side of the business that builds networks. However in the third quarter we know that Home shipped 3.3 million digital entertainment devices and in the 4th quarter 3.4 million, both numbers down around 20% in units and slightly more in revenues. In total, mobile devices were down 41% last year.
Given that nothing in the market has been suggesting that either of these markets in their entirety are down by anything like that much, it looks to us like Motorola has been losing market share here, as well as in handsets. Motorola said at the time that demand for HD was driving its business, and higher value devices were making it more profitable. It is expected in the coming quarters that Europe will have the bulk of HD shipments, as the US slows down, and that is a market where Motorola is weaker.
It looks for the world that the set top and cable business was meant to be sold off, and that as no-one would buy it, Sanjay Jha, the boss of the handset side, who wants to run his own show, has said, okay throw it in with my division.
Jha justified the move by saying that it means that his operation can target 3 screens, though we’re not sure how unless it launches into some form of PC or Netbook market – smart books are likely.
He does have a point though, there has long been a use case for handsets speaking to set tops and portable copies of media moving around the home and beyond. Motorola has never addressed this in a product though and will be starting from scratch.
The remaining Motorola business will take in Enterprise Mobility Solutions and the Networks Businesses, supplying two-way radios, mobile computers, secure public safety systems, scanning, RFID, and wireless network infrastructure and this will be run by the existing co-CEO Greg Brown. The two groups will start operating separately immediately with their respective bosses.
Eventually the break up deal will be done through a tax-free stock dividend of shares and the larger networking business will take much of the existing public debt. However both companies will use the Motorola brand, with the mobile device business taking name ownership and offering a free license to use the name to the other business.