Motorola
Brown oversees that group and the home-entertainment and networks unit, which together account for about two-thirds of revenue. Co-CEO Sanjay Jha leads the handset division, whose split from the rest of the company was announced last year. Once thats done and the economy rebounds, Motorola may seek acquisitions, Brown said.
“Fast forward the tape 12 to 24 months, I think its fair to say we would evaluate opportunities that we thought were pretty compelling,” he said in an interview last week at Motorolas headquarters in Schaumburg, Illinois.
Motorolas business probably will begin recovering through the second half, said Brown, 48. Sales in the government and corporate business dropped 15 percent in the first as companies froze spending in the worst recession in 50 years. Handset sales fell at three times that rate, hurt by competition from rivals like Apple Inc., which introduced a new iPhone last month.
“Most people that have invested in Motorola over the years have been paying attention to the handsets,” said Matt Thornton, an analyst at Avian Securities LLC in Boston. While the government and corporate business doesnt draw as much scrutiny because it doesnt sell to consumers, its “the most valuable asset in the portfolio,” he said.
Share Performance
Investors have snapped up Motorola shares this year, betting on the companys plans to improve its mobile-phone unit, Thornton said. When the company is split, the corporate and government segment will get more attention, he said.
Motorola dropped 3 cents to $7.22 at 9:35 a.m. in New York Stock Exchange composite trading. The stock had gained 64 percent this year before today, compared with 11 percent for the Standard & Poors 500 Index.
Second-quarter mobile-phone sales declined to $1.83 billion, Motorola said last week. Revenue at the home and network unit, which includes TV set-top boxes, fell 27 percent to $2 billion.
Sales at the enterprise mobility unit, which sells bar-code scanners to retailers and supplies emergency and police departments with walkie-talkies, declined 17 percent to $1.69 billion. Motorola controls about 70 percent of the global market for government wireless networks, Avians Thornton said.
Acquisitions may help Motorola offer a wider range of services to clients or expand international sales, he said. North America represented 57 percent of the units sales last year, with the U.S. government making up 8 percent.
Broader Reach
Any purchases would occur after the split is completed, he said. Motorola postponed the separation almost a year ago as the economic slump worsened. The timing of the breakup will hinge on the economic recovery and how the handset divisions new products perform, Brown said.
Motorola, which hasnt released a bestseller since its Razr device in 2004, plans to debut phones for the holiday season based on Google Inc.s Android software. The company has narrowed its range of phones, allowing the division to pare payrolls. Motorola has cut 8,000 jobs, with about three-quarters of those at the handset business.
Global Phone
The worldwide mobile-phone market will shrink 13 percent this year as the global economic crisis damps demand for new handsets, according to IDC of Framingham, Massachusetts.
While the mobile-devices unit has typically overshadowed Motorolas other businesses, the split may help the home, corporate and government units attract new investors, Brown said.
“Even though my organization is two-thirds of Motorola and 100 percent of the profit — obviously, were 100 and X percent — we dont get talked about,” he said. “Ive always believed the nucleus and strength of Motorola was in the systems business.”