Motorola's Network Business Goes to Nokia Siemens

Motorola  has found a buyer for its wireless network equipment unit: Nokia Siemens Networks will pay US$1.2 billion for most of that business, the companies announced Monday. The acquisition will bring Nokia Siemens around 50 new customers. The two wireless infrastructure vendors have few customers in common, although those they do are large ones such as China Mobile, Vodafone, Verizon Wireless, Sprint and Clearwire. Motorola co-CEO Greg Brown said in a statement that he chatted with a few potential buyers but Nokia Siemens made the most sense financially, strategically and from a people and culture standpoint.

"We talked to a few different potential acquirers, but Nokia Siemens made the most sense financially, strategically and from a people and culture standpoint," Motorola co-Chief Executive Greg Brown said. “This is an exciting acquisition that I believe has significant benefits for customers, employees and our shareholders,” said Rajeev Suri, chief executive officer of Nokia Siemens Networks. Motorola has a cunning plan to split itself into two independent companies. One focused entirely on handsets will be called Motorola Mobility and will be under co-CEO Sanjay Jha.

Motorola was a rarity in the mobile phone business, producing both handsets and network infrastructure. Most of the other big players have already split their operations. Ericsson retained its network business but formed a joint venture with Sony to make phones; Alcatel sold its handset manufacturing operations (although it still sells those handsets under its own brand in France), and Siemens got out of both businesses, selling its mobile phone subsidiary and pooling its infrastructure business with Nokia to form Nokia Siemens Networks, the company buying Motorola's infrastructure activities.

“Motorola’s current customers will continue to get world—class support for their installed base and a clear path for transitioning to next generation technologies while employees will join an industry leader with global scale and reach. “NSN will see the benefits of a deal that is expected to enhance profitability and cash—flow and to have significant upside potential,” he added. Approximately 7,500 employees are expected to be transferred to Nokia Siemens Networks from Motorola’s wireless network infrastructure business when the transaction closes, including large research and development sites in the United States, China and India.

Motorola is in the midst of splitting into two independent, publicly traded companies in the first quarter of 2011. The mobile phone and television set-top-box units will form one company called Motorola Mobility under co-Chief Executive Sanjay Jha. The enterprise mobility and networks businesses were to form the other company, called Motorola Solutions and headed by Brown. Motorola Solutions now will consist of just enterprise mobility. Brown said the sale of its wireless networks unit would enable his team to "further sharpen the strategic focus of our remaining Motorola Solutions business." Motorola, which once did quite well with its Flip and Razr lines of mobile phones, has lost a lot of ground over the last few years to Research In Motion, Sony Ericsson, Samsung and Nokia.