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updated: 4/15/2014 4:18 PM

Motorola Solutions shrinks, while Zebra grows

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  • Zebra Technologies in Lincolnshire.

       Zebra Technologies in Lincolnshire.
    Steve Lundy | Staff Photographer

  • Motorola Solutions sign in Schaumburg.

       Motorola Solutions sign in Schaumburg.
    Bob Chwedyk | Staff Photographer

  • Greg Brown

      Greg Brown

  • Anders Gustafsson, CEO of Zebra Technologies in Lincolnshire.

      Anders Gustafsson, CEO of Zebra Technologies in Lincolnshire.

 
 

Schaumburg-based Motorola Solutions Inc. continues to chip away at its legendary status by selling its Enterprise unit to Lincolnshire's Zebra Technologies for about $3.45 billion.

While Zebra continues to pick up steam, building its radio-frequency identification and specialty Internet-related products, Motorola shrinks both in workforce and focus.

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"Motorola said last year it was reviewing its strategy, so this sale made sense," said Peter Wahlstrom, senior analyst with Chicago-based Morningstar. "It will become a leaner Motorola with a streamlined and more focused company. Sure it will be smaller, but it will be more nimble."

Whether nimble will mean that a smaller Motorola will keep its innovative edge and eventually grow is yet to be seen. Still, growth isn't entirely out of the question, Wahlstrom said.

"It still has a diversified customer base and it will focus more outside the United States," he said. "It could grow overseas over time, both with its workforce and its sales. We see it focusing more in Europe, Asia and the Middle East."

Legendary Motorola Inc. in 2011 split into two publicly traded companies. Motorola Mobility, which later sold to Google, and Motorola Solutions, which continued to make acquisitions of its own, including Symbol Technologies Inc. in 2007 and others. Those acquisitions eventually formed Motorola Solution's Enterprise unit. That unit provided about 31 percent of Motorola's overall revenue in 2013 and continued to make mobile computers, scanners and other products for the retail, transportation, logistics and manufacturing industries.

Zebra Technologies, which had about $1 billion in sales last year, specializes in bar code printing, asset tracking, and motion and location sensing. The combination of its technologies, along with Motorola's Enterprise business, could create an industry leader, both companies said.

Motorola Solutions started reviewing its strategies last year and found "that the synergies between our government and enterprise businesses were not as great as the value we could create by having each business separately focused on its core markets," said Motorola Solutions spokeswoman Tama McWhinney.

She said the transaction "will enable both companies to continue growing, innovating and creating value for our respective customers and shareholders," she said.

Motorola now has about 21,000 employees worldwide, including about 4,000 in Illinois. After the Zebra transaction is complete by the end of this year, Motorola will have about 16,500 employees as it transfers about 4,500 to Zebra. Then about 3,750 will remain in Illinois, said McWhinney.

Currently Zebra has about 2,600 employees worldwide, including 1,500 in Illinois.

So far, Motorola Solutions plans to keep CEO Greg Brown and its headquarters in Schaumburg, she said.

Phil Gerskovich, executive vice president of emerging platforms at Zebra, said that it has worked closely with Motorola over the last 20 years. Zebra CEO Anders Gustafsson and Greg Brown frequently talk together.

So when Motorola Solutions organized a competitive process to sell the Enterprise unit, Zebra got in line.

"The industry has speculated for years that these two pieces of their solutions should be together," Gerskovich said.

Merging the two suburban tech giants likely will lead to more innovative products for the mobile worker.

Since the companies are required to gain government approvals from countries worldwide, the process to finalize Tuesday's deal likely will take up to six months, Gerskovich said.

Zebra is on track to move much of its operations into a new headquarters in Lincolnshire, and expects to need even more space with the new acquisition.

"Our planning to integrate will start next week," Gerskovich said.

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