July 19, 2010

Nokia Makes $1.2 Billion Motorola Purchase

Nokia said Monday it would buy $1.2 billion worth of Motorola's wireless network infrastructure assets.

Nokia Siemens Network and Motorola said in a joint statement, "The companies have entered into an agreement under which Nokia Siemens Networks will acquire the majority of Motorola's wireless network infrastructure assets for 1.2 billion US dollars in cash."

Nokia said the move would strengthen its position as the world's top telecom infrastructure industry, which has become increasingly integrated over the past years.

The company said it expected the transaction "to significantly strengthen (its) presence globally, particularly in the United States and Japan."

Nokia will gain about 50 operators who are clients of Motorola, including China Mobile, Sprint and Verizon of the U.S. and Britain's Vodafone.

The company said that about 7,500 employees will transfer to Nokia from Motorola on completion of the transaction.

Nokia said that both firms expect to complete the deal by the end of 2010, which is still pending regulatory approvals.

This deal makes Nokia the number one foreign wireless vendor in Japan and strengthens its position as the number two telecom infrastructure maker in the world.

Some analysts question the deal because of Motorola's tiny 3 percent global market share and its integration of employees.

"It is a desperate attempt to gain market share in the U.S. after the twice failed attempts to buy Nortel's CDMA and Metro Ethernet businesses," Earl Lum, founder and chief of industry research company EJL Wireless, told Reuters.

"The integration of the personnel and the manufacturing facilities and supply chain will prove to be challenging in addition to the differences in corporate cultures," he said.

After the deal, Motorola plans to split into two entities, one of which will include its mobile phone and set-top box business and the other will focus on network equipment.

Motorola will still keep its network technology patents, which Nokia can use through a cross-licensing agreement.


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