Report: Moto suspends auction of network unit
Motorola Inc. suspended an auction for its home and networks business because bids were coming in lower than the maker of the Droid smartphone expected, the Wall Street Journal reported today.
Motorola had sought bids of $4 billion to $5 billion for the unit, the newspaper said, citing unidentified people familiar with the matter. Instead the division, which makes cable set-top boxes and wireless networking equipment, got offers of about $3 billion to $4 billion, the Journal said.
The company is examining whether it makes more sense to keep that business and the mobile-phone unit as device sales increase, the newspaper reported. Schaumburg, Illinois-based Motorola last week introduced its latest smartphone based on Google Inc.'s Android software, as it tries to revive wireless sales and challenge Apple Inc.'s iPhone.
"If the phone unit doesn't return to profitability as scheduled, then selling off the most stable unit could be a problem," said Tero Kuittinen, an analyst at MKM Partners in Greenwich, Connecticut, who has a "sell" rating on the stock.
The home and networks unit reported sales of $2.01 billion last quarter, accounting for 36 percent of Motorola's revenue, and had an operating profit of $199 million.
"The set-top business is much healthier in the long term than people give it credit for," Motorola Co-Chief Executive Officer Greg Brown said in an interview last week.
Board to MeetIf Motorola were to sell that business and stick to its original plan to spin off the phone unit, the company would be left with the enterprise mobility unit which makes scanners as well as two-way radios for emergency services.The board will meet in coming days to talk about strategy and the company could still proceed with the original plan, the Journal said. The home and phone businesses together accounted for almost three-quarters of Motorola's more than $30 billion in sales in 2008.Motorola spokeswoman Jennifer Erickson declined to comment on the Journal's report.Motorola advanced 11 cents, or 1.5 percent, to $7.71 at 4:15 p.m. on the New York Stock Exchange. The shares surged 75 percent last year, its best annual performance in a decade.The company, led by Brown and co-CEO Sanjay Jha, decided to pursue the mobile-phone spinoff almost two years ago, only to postpone the move amid a deepening recession. Jha, who heads the wireless unit, said in an interview Jan. 6 that Motorola still plans to split in two and the timing will depend on the recovery of the economy.Interested PartiesHuawei Technologies Co., a Shenzhen, China-based wireless equipment maker, submitted a bid, the Journal said. Ross Gan, a spokesman for Huawei, didn't immediately return an after-hours e-mail seeking comment.Arris Group Inc., which makes broadband equipment, had also bid for the Motorola unit, the Journal said. Jim Bauer, a spokesman for Suwanee, Georgia-based Arris, declined to comment.Goldman Sachs Group Inc. and JPMorgan Chase Co. are the lead banks advising Motorola on the sale, according to the paper. Andrea Rachman, a spokesman for Goldman Sachs, and Tasha Pelio, a spokeswoman for JPMorgan, declined to comment.