Analysts: Motorola Mobility could be sold again
http://www.motorola.com/Consumers/US-EN/Home">Motorola Mobility's legendary phone business could be up for grabs once Google closes its deal to acquire the Libertyville-based company, Wall Street analysts are forecasting.
Several analysts this week issued reports that predicted a sale or a spinoff of the handset and set-top box businesses after Google becomes the official owner. They believe the acquisition by Google, announced last week, was all about the patents and Google may be looking to unload the rest very quickly.
The #8220;disposal#8221; of the phone and cable business is #8220;inevitable#8221; and a potential buyer could come from Asia, Nomura Equity Research analyst Stuart Jeffrey said Wednesday.
#8220;I don't think they need to close Motorola Mobility,#8221; said Jeffrey. #8220;The brand still has resonance and good operator relationships in many important markets. That's an asset that could easily be sold on.#8221;
However, whatever Wall Street analysts say is just speculation, said Libertyville Mayor Terry Weppler. He believes shuttering Motorola Mobility isn't part of the deal.
#8220;They told us they're staying and that's what I know,#8221; said Weppler. #8220;Everyone is speculating, but if they had a crystal ball, they'd be millionaires, and they're not.#8221;
On Aug. 15, Google announced it would acquire Motorola Mobility for about $12.5 billion. The companies still face regulatory approval in the United States as well as other countries where they have operations. So the deal could close later this year or early next year.
Google spokeswoman Katelin Todhunter-Gerberg on Wednesday would not address any questions related to Google's plans for Motorola Mobility's phone and cable businesses after their acquisition closes.
Marcelyn Love, a spokeswoman with the Illinois Department of Commerce and Economic Opportunity, which inked a deal with Moto to keep its headquarters in Illinois, could not provide further insight into the state's discussions with both companies.
Another analyst believes Google will turn around and sell Moto's phone and cable products business.
#8220;I think it's highly likely that if they can find a suitable buyer, they'd sell Motorola Mobility,#8221; said Edward Snyder, managing director of Charter Equity Research. #8220;Other than the patents, Motorola Mobility holds little for Google. The business models have nothing in common and it represents a threat to the Android (manufacturers). Who knows if such a sale would happen but I definitely think it's on their minds.#8221;
Another believes a spin off is likely.
#8220;It wouldn't surprise us if Google spun off the handset and the set-top cable businesses after the close,#8221; said Josh Olson, technology analyst with Edward Jones.
Speculation has run rampant on Wall Street that Google's target was all about 17,000 patents in Moto's portfolio, which include more than 80 years of innovation from the mother ship, Motorola Inc., before its spinoff in January.
Jeffrey puts that patent figure closer to 24,500, including patents that are pending.
After all, there are a limited number of big patent portfolios out there, such as at InterDigital, Kodak, and Alcatel-Lucent, that have market caps below $10 billion. Of these, Motorola Mobility and Alcatel-Lucent offer the biggest portfolio of patents. In Moto's favor was its patents were more mobile phone centric, Jeffrey said.
Also, Moto wasn't Google's first choice, Jeffrey said. Google initiated discussions with Motorola Mobility the day after it lost the Nortel patent auction. The deal was closed in just five weeks. During that time, Motorola Mobility CEO Sanjay Jha commented before the Google announcement that he was considering Microsoft instead of Google's Android for an operating system. That comment was designed to #8220;pressure Google into a deal,#8221; Jeffrey said.
#8220;It seems like Motorola Mobility was a fallback for Google if it lost the Nortel bid. The quick transition of discussions to Motorola Mobility suggests to me that Motorola Mobility was their second choice option. After all, if they had wanted all of Motorola Mobility, they could have started discussions at any time,#8221; Jeffrey said.