Motorola reportedly looking to sell set-top box unit

Schaumburg-based Motorola Inc. is looking for buyers for its division that makes cable television set-top boxes, and is seeking about $4.5 billion, the Wall Street Journal reported today.

The company retained JPMorgan Chase & Co. and Goldman Sachs Group Inc. as advisers on a possible sale, the newspaper said, citing people familiar with the matter. Private-equity firms and communications-gear makers are among possible buyers for the home and network mobility unit, it said.

The division accounted for about a third of Motorola's sales last quarter. The company, which posted losses of more than $4 billion last year, is betting on a series of smart phones based on Google Inc.'s Android operating system to revive growth, even as it plans to spin off the phone unit. A price of $4.5 billion "makes sense" for the set-top box division, said Matt Thornton, an analyst at Avian Securities LLC in Boston.

"We value this part of the business at a little over $3.8 billion," said Thornton, who rates the shares "positive" and doesn't own any. "This deal would indicate an 18 percent premium."

Motorola said in a statement today that it doesn't comment on rumor or speculation. It did say plans to separate into two independent companies "is the publicly stated long-term goal."

Andrea Rachman, a spokeswoman for Goldman Sachs, declined to comment, as did Tasha Pelio, a spokeswoman at JPMorgan.

'Best Growth'

Profit at the TV set-top box unit fell 24 percent last quarter to $199 million as sales dropped 15 percent to $2.01 billion. Motorola expects "a bit of an uptick" in the unit's sales this quarter, while revenue should still be below year-earlier levels, Chief Financial Officer Edward Fitzpatrick said Oct. 29.

Motorola first announced plans in March 2008 to split into two companies, one that focused on mobile handsets and one that would combines the set-top box business with its enterprise mobility solutions unit, which makes two-way radios and scanners. The company delayed the plans seven months later, citing the global financial crisis and slowing U.S. economy.

Last month, co-Chief Executive Officer Sanjay Jha said that progress was being made to split off the wireless division.

A sale would "change Motorola as we know it," Thornton said. If the company sells the home and network mobility unit and spins off the mobile business, "you're essentially left with the enterprise mobility business, which has the highest margin and best growth."