Emerson buying Motorola unit
Diversified manufacturer Emerson Electric Co agreed to buy a Motorola embedded communications computing unit for $350 million in cash, the companies said Friday.
Motorola said it was selling the unit -- which supplies processor chip boards used in everything from computer and telecom products to medical imaging, defense and industrial products -- to focus on its core telecommunications business.
Shares of No. 3 mobile phone maker Motorola, which has been struggling to return to profit amid weak sales of its cell phones, fell as much as 3 percent after the news.
Motorola, based in Schaumburg, did not disclose the financial impact of the deal to future earnings or revenue but said the business had been "marginally profitable" and generated 2006 revenue of $520 million.
Based in Tempe, Ariz., the Motorola unit employs about 1,100 people, the companies said.
Oppenheimer analyst Lawrence Harris said it made sense for Motorola to avoid the distraction of a non-core business but noted some investors were disappointed the sale price was lower than the unit's annual revenue.
Motorola had posted sales of $8.7 billion in its second quarter.
Motorola's stock regained some of its earlier losses and was down 16 cents, or 0.86 percent, at $18.53 at mid-afternoon, while Emerson fell 4 cents to $53.33, both on New York Stock Exchange
The unit will become a part of the Emerson Network Power business, boosting St. Louis-based company's presence in the $6 global billion merchant embedded computing business.
The main purpose of embedded computing technology is to control machines or computer systems and manipulate data, the companies said. For example, in telecoms the technology routes and monitors voice and traffic across multiple networks.
"Wireless adoption is driving long-term telecommunications market growth and broadband applications are reviving near-term wireline investment," Emerson Chief Executive David Farr said in a statement.
"As we watch the telecom world quickly bring voice, video and data together for its customers, we believe the addition of the Motorola ECC business significantly strengthens our position for growth," he added.