Speculation emerges of broader restructuring
By Richard Waters in San Francisco
Published: September 21 2003 21:03 | Last Updated: September 21 2003 21:03
While the strategic differences in Motorola's boardroom remained unclear on Sunday, the departure of Chris Galvin has already prompted a flurry of speculation about whether a broader restructuring of the company could follow, potentially including the eventual disposal of parts of its business.
As the third generation of his family to run the venerable US electronics giant, Mr Galvin was long seen as an opponent of any significant dismemberment of the group. And even if a dramatic strategic reversal is not immediately triggered by his departure, the abrupt management shake-up and the company's continuing difficulties in some of its core markets are likely to prompt a scramble among rivals interested in trying to acquire parts of its business.
Lex: Motorola
It is tempting to say that the most surprising thing about the resignation of Chris Galvin as chief executive of Motorola is that he lasted so long.
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Motorola has itself looked at carving off significant parts of its business. Also, an evaluation of the company's overall portfolio of businesses was part of Mr Galvin's restructuring plan, though little has come from this so far.
Internal disagreements over strategic direction have prevented the company from taking more radical actions, according to one person familiar with the company. Mr Galvin's departure "could be the catalyst to make something happen," this person added. "You have to think this means the current situation is untenable."
Company executives have talked openly about the need for mergers in the global chip business, as well as their willingness to consider deals involving the company's troubled semiconductor division, one of the 10 biggest chip producers in the world.
Despite negotiations with STMicroelectronics , nothing has come of any talks so far. Also, in spite of a continuing round of restructurings, the chip division has continued to lose money, blaming its latest reversal this year on intensified competition from Asia.
For a full transcript of the interview with John Pepper, presiding director of Motorola's board,
Click here
Motorola is also thought recently to have explored the disposal of a second division, which sells infrastructure for wireless communications networks, though without success. The unit lost more than $2bn in 2001 and 2002. Though a leader in the CDMA infrastructure used in wireless networks in the US and some parts of Asia, Motorola largely missed the boom in demand for UMTS networks that signalled the first wave of investment in third-generation wireless systems.
The division is seen as a possible fit with Ericsson and Nokia, which have less presence in CDMA, though these companies have not pressed the technology as an important part of their own businesses. Also, Motorola is still heavily dependent on a proprietary technology, known as iDen, that it sells to US wireless carrier Nextel , and which has failed to establish a wider market. Among its other divisions, Motorola has a number of businesses that would make attractive acquisition targets.
As well as being the biggest maker of cable modems and transmissions systems for cable television systems, the company is a significant maker of electronics for the automotive industry. A specialisation in security systems for government agencies has also benefitted from the increase in security spending in the US. |
