Motorola Solutions exploring sale of company, reports say

Officials for critical-communications manufacturing giant Motorola Solutions are contemplating a potential sale of the 87-year-old company, which refused to comment on the speculation, according to reports from Bloomberg, the Wall Street Journal and other media outlets.

If Motorola Solutions is sold, it would represent the final step in dismantling the iconic communications firm during the past several years.

In 2010, Motorola announced that it would sell its commercial-networks division that developed LTE infrastructure to Nokia Siemens Networks. In 2011, the Google paid $12.5 billion for Motorola’s commercial-handset unit, some of which was sold later to Lenovo. Less than a year ago, Motorola Solution sold its enterprise division to Zebra Technologies for $3.45 billion in an all-cash deal.

Despite this focus, Motorola Solutions last week reported that 2015 sales are expected to be flat to a 2% decrease when compared to 2014. On Friday, TheStreet Ratings downgraded the company’s stock from “Buy” to “Hold” status.

A spokesperson for Motorola Solutions declined to comment on stories regarding the potential sale, noting that the company does not comment on rumor and speculation.

When the Zebra Technologies deal was announced, Motorola Solutions Chairman and CEO Greg Brown said that shedding the enterprise unit would allow Motorola Solutions to “have absolute clarity of purpose and mission, as we serve customers globally with our suite of mission-critical communications solutions.”

Proponents of Motorola Solutions’ strategy noted that allowing the company to concentrate on its public-safety and mission-critical portfolio made sense, because that is where the company historically had dominated. Motorola Solutions has 80% market share in public-safety LMR, by some estimates, and realized healthy profit margins.

Meanwhile, critics of the strategy cited the belief that the various moves left Motorola Solutions largely dependent on public-safety communications in the future. While the company remains the leader in first-responder land-mobile-radio (LMR) systems, Motorola Solution is not positioned as well for those customers to migrate to broadband technologies such as LTE.

Whether the migration to broadband occurs happens via deployments by FirstNet or another mechanism, Motorola Solutions would not be able command the dominant market position that it holds in public-safety LMR, according to industry observers.

In addition, the demand for open-standards solutions in the hotly competitive broadband space would prevent Motorola Solutions from realizing the hefty profit margins it traditionally has enjoyed with LMR systems, industry observers said. This would be especially true for LTE systems, where Motorola Solutions has been dependent on reselling Ericsson equipment—presumably with Ericsson realizing a profit margin—instead of being able to use its own gear, according to sources.

It should be noted that Motorola Solutions has leveraged its Ericsson relationship to build the first operational public-safety LTE system in Harris County, Texas, and to win the lucrative bid to deploy a public-safety LTE network for the Los Angeles Regional Interoperable Communications System Authority (LA-RICS).

All industry sources indicated that reports of Motorola Solutions exploring a sale were noteworthy, but no one interviewed by IWCE’s Urgent Communications expressed shock at the notion, because there has been speculation about the company’s future path for some time.

In fact, when Airbus DS Communications was put on the selling block last fall, one industry insider indicated the possibility of a company even as large as Motorola Solutions could be an acquisition target in the near future.

“Consolidation in this industry will continue,” according to the industry source, who spoke on the condition of anonymity. “And, if you think anyone in this industry is not a purchase or divestiture, you’re mistaken.

“Look at what Motorola has done. They’ve shed themselves of their cellular business. They’ve shed themselves of their enterprise business systems. Now, their radio business is small enough to be acquired by anyone. So don’t think that the industry is a secure place for all contracts and everybody as you know them today. In the next 5-10 years, the lay of the land will be different.”