Motorola boost set-top line with Chinese acquisitions

Motorola Inc. said Monday it added another 180 workers after it acquired two Chinese companies that make set-top cable boxes for the Asian market.

The companies are Zhejiang Dahua Digital Technology Co. Ltd. and Hangzhou Image Silicon. They are collectively known as Dahua Digital, a privately held, developer, manufacturer and marketer of set-tops and related integrated circuits.

The acquisitions have closed and the companies would not release the value of the deals. The Chinese firms will not be involved in making set-top boxes for the U.S. market, said Motorola spokeswoman Jennifer Erickson.

These acquisitions bolster Motorola's leadership position in the set-top box market where it even beats Cisco, said Rick Franklin, analyst with Edward Jones in St. Louis, Mo.

"The Chinese market should have strong growth opportunities and this should enhance Motorola's ability to market there," Franklin said. "However, Motorola has executed multiple mergers in the past two years. Mergers are not always easy to integrate and may distract management from operating the core business. While incrementally neutral to slightly positive, these mergers are likely not enough to impact Motorola's overall problems in its much larger handset business."

The transaction will expand Motorola's digital set-top box offerings in China and improve Motorola's delivery time in the region. Further, Dahua Digital's low-cost chip sets, designed specifically for the Chinese set-top business, will enhance Motorola's product line, Motorola said.

Dahua Digital will be integrated into Motorola's Home & Networks Mobility business but will remain in Hangzhou, China.

Analysts also believe the acquisitions were good moves by Motorola.

"I took it as a positive that Motorola still investing in its cable and set-top box business given the turmoil in handsets," said Mark McKechnie, analyst with American Technology Research in San Francisco. "I'm not sure the motivation. It could be to improve their cost structure or technology offering, or even to achieve more penetration into the Chinese local market."