Big deals attract attention. Watching mergers and acquisitions play out is a perennial spectator sport in the technology business, in part because the results of M&As take time to reach fruition or wither on the vine.
After Motorola Inc. announced last week it would throw down nearly $4 billion in cash for recently repositioned Symbol Technologies Inc.-a big play in the mobile enterprise sector that has promised much and thus far only half-delivered-people in the industry naturally wanted to know whether it’s a brilliant move, or whether a colossal misstep is in the offing.
“Time will tell” is trite but true; meanwhile, people are talking.
As Motorola declared that Symbol would henceforth form the core of its enterprise and network division, Moto executives dutifully delivered the requisite hyperbole extolling the virtues of an acquisition, even as the company’s public-relations people explained that a products and services roadmap was not ready for prime time.
The reaction among financial analysts at CIBC World Markets, UBS and BMO Capital Markets tended to be positive, though BMO analyst John Bucher cited risks posed by Symbol’s lower operating margins and the cultural unknowns of merging Motorola’s enterprise and network division with Symbol. Bucher also cited Symbol’s history of investigations by the Securities and Exchange Commission into accounting misconduct that resulted in leadership changes and restatements of earnings-issues he said Motorola undoubtedly explored to its satisfaction. A new management team appears to have righted Symbol and cut costs. Standard & Poor’s said the transaction would not affect its ratings or outlook on Motorola.
Among market analysts, Cliff Raskind, wireless enterprise analyst with Strategy Analytics, said that Symbol’s intellectual property in radio frequency identification and RFID readers boded well for Motorola’s efforts in consumer near-field communications used in contactless payments and vertical enterprise markets. The bigger story, Raskind said, was the fulfillment of Motorola’s strategic need for an enterprise-grade wireless local area network partner in pursuing its fixed-mobile convergence plans.
While the acquisition marks the possible blending of WLAN, WAN devices and data applications for the enterprise and provides Motorola with valued intellectual property rights, Current Analysis analyst Avi Greengart noted, “this takes Motorola way out of its consumer handset comfort zone.” Yet the acquisition will give Motorola Symbol’s customers and vertical channel partners enough reach to impact competitors such as Nokia Corp., Research In Motion Ltd. and the M2M efforts of Kyocera Wireless Corp., according to Kitty Weldon, another analyst at Current Analysis.
Ed Zander, Motorola’s chairman and chief executive officer, told investors and analysts that “we’re buying a whole business” that added critical mass to Motorola’s recently merged networks and enterprise division. (According to Venture Development Corp., that division accounts for about 27 percent of Motorola’s business, not taking into account the Symbol acquisition.)
In short, the American handset vendor-on-a-tear plans to use the acquisition to jump-start its enterprise and networks division into a major profit center and fulfill its plans for “seamless mobility,” connecting individuals via handset while at work, home and play.
Zander cited Symbol’s worldwide reach, intellectual property and customer base-a “who’s who in global enterprise”-that would enable Motorola to bring “whole solutions” to I.T. managers and chief information officers at the world’s leading businesses.
“The Internet is about to go airborne,” Zander crowed.
Greg Brown, Motorola’s president of networks and enterprise, said Symbol’s rugged terminals, RFID systems, enterprise-oriented wireless infrastructure, automatic ID and capture technology and its mobility management platforms would dovetail with Motorola’s strengths.
