Motorola's breakup in sight: Nokia Siemens buys wireless networking unit

Summary:In another step toward its breakup, Motorola unloaded its wireless networking unit to Nokia Siemens Networks for $1.2 billion.

In another step toward its breakup, Motorola on Monday unloaded its wireless networking unit to Nokia Siemens Networks for $1.2 billion.

For Nokia Siemens, the purchase of most of Motorola's wireless network infrastructure assets gives the company a better footprint in the U.S.---specifically CDMA technology and WiMax. Nokia Siemens gets access to more than 50 operators and some new sales ground to till. Motorola counted Clearwire, Sprint, Verizon Wireless and Vodafone as customers. With Motorola's wireless assets, Nokia Siemens will be No. 3 in the U.S., No. 1 in Japan and No. 2 globally.

The deal will close by the end of the year and Nokia Siemens will take on the 7,500 employees in Motorola's wireless unit. Motorola's wireless unit had a revenue run rate of about $4 billion.

In the big picture, Motorola's sale is one more step in separating its wireless handset unit, which is now best known for its Droid smartphones. Motorola plans to spin off its handset unit is expected to be complete in the first quarter of 2011. Motorola's handset unit will be spun off tax free to existing shareholders and include mobile devices and home networking gear. Motorola will retain its enterprise---or Enterprise Mobility Solutions (EMS)---unit .

In a research note, Oppenheimer analyst Ittai Kidron said:

Bottom line, Motorola is taking more steps to separate their businesses and get fair market value—a positive. When the separation transpires, Motorola's EMS business will be unburdened. We believe EMS accounts for most of Motorola's stock price at current levels, emphasizing the discount of Motorola's handset unit.

Jefferies analyst William Choi said that Motorola could have received a higher bid from joint venture partner Huawei, but political opposition would drag out the deal and delay the company's breakup.

Related: Motorola's Droid X could gain from HTC supply pain, Apple iPhone 4 flap

Topics: Mobility, Networking, Nokia, Wi-Fi

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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