Sometimes, rumors make sense. The news that Sprint would be giving Clearwire more cash, which was leaked by the Wall Street Journal one day before it was officially announced, came as little surprise. There had been hints from Clearwire for some time that it would need additional funding to complete its ambitious network build out, and many regarded it was just a matter of time before the company received an additional injection of cash from its investors.
Now there’s the report, again from the Wall Street Journal, that Motorola is planning to spin off its Home and Networks Mobility unit. As one blogger put it, “Motorola: Here’s an idea: Let’s Sell Off Our Most Profitable Division.”
In a recent interview with Wireless Week, Motorola’s networks chief Bruce Brda emphasized the success of the company’s infrastructure business. “We’ve faced and solved problems our competitors haven’t solved yet, voice over IP being one,” he said in reference to the company’s work with WiMAX.
Unlike Motorola’s beleaguered handset unit, its set top boxes and network segment is doing comparatively well. The company recently shipped its millionth WiMAX device and had the largest sales of all three divisions with $2 billion, trumping revenues from Motorola’s handset and enterprise segments. The profitability of Motorola’s networks business and enterprise unit has helped offset continued losses in its handset division, which lost $183 million in the third quarter.
Motorola did not respond to requests for confirmation of the rumor by press time, but had stated in other reports that it remains “committed to the separation goal and continue to believe that it is the right strategy to position Motorola for long-term success.”
Motorola has been planning to sell off its handset division for some time, but the plans appeared to be on the back burner when the company failed to find a buyer. A sale of the networks business would mean the company is planning a three way split instead of a two way split.
Motorola’s rumored decision to sell off its most profitable segment comes at a time when the company seemed to be turning itself around. After several quarters of continued losses, Motorola posted an unexpected third quarter profit. In addition, they appear to be regaining ground in their long-troubled handset division with the launch of the DROID with Verizon Wireless.
Some speculate that the company’s recent fiscal improvements make this a perfect time for a sell off. The industry will have to wait and see.