Google Preps Sale of Motorola Home
Google (Nasdaq: GOOG) is expected to put Motorola Mobility LLC 's cable assets up for sale as early as this fall, industry sources tell Light Reading Cable.
Multiple industry insiders and people in cable M&A circles confirm that Google has not yet started the formal sales process for the Home division, which makes and sells cable modems, set-tops, video processors, edge QAMs, cable modem termination systems (CMTSs) and video navigation software. However, there's strong consensus that Google will put Motorola on the block, though there's some variance on when the process will officially get underway. Barclays Capital is rumored to be the banker Google has hired for the sale.
According to one source, the expectation is that Google will get it going as soon as early September, and complete the initial round of bidding in October. Depending on how quickly things move, Google could have a deal in place by the end of November or by mid-December.
Another source says Google might require more time to finish its strategic assessment of the Motorola assets, and that it will likely strip out the intellectual property that's most import to Google before it puts the cable assets on the block.
How much IP Google decides to retain will affect its asking price. One source estimated that Google, which paid $12.5 billion for Motorola Mobility, might be able to get $2 billion for what's left of the Home business after it figures out what IP it wants to retain.
And the initial process and level of interest will probably determine if Google will end up selling all of those assets to one buyer or if it might be willing to split them into pieces.
Google could expand the number of potential bidders if it opts to split things up. A company like Pace plc , for example, might be interested only in Moto's CPE business, while Juniper Networks Inc. (NYSE: JNPR), if it jumps into the fray, might only have eyes for Home's network assets. Ericsson AB (Nasdaq: ERIC), which is said to have much interest in boosting its North American cable presence, may try to buy the whole thing. (See Light Reading Poll: Who Will Take Motorola Home?)
One source expects Google to trim it down to three to five potential candidates, and that there appears to be only a small chance that two Chinese interests -- Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) -- will even be invited to the party. "Google will be fairly selective on how they go about this," the person says.
Chatter about the fate of Motorola's cable assets has increased ever since cable industry vet Marwan Fawaz was named executive VP of Motorola Home late last month. Fawaz, who once served as a technology analyst for Paul Allen's Vulcan Ventures , succeeded Dan Moloney, who most recently served as president of Home. (See Motorola's Home Unit Hires New Leader and Motorola Home Adds M&A Expertise.)
Motorola recently transferred a "small portion" of its field engineering team to Telecommunication Support Services Inc. (TSS), but said the process was underway well before Google acquired the company.
Still, sources expect Motorola Home to make more significant moves later this year as Google prepares for a sale. (See Google Unloads Some Moto Engineers.)
— Jeff Baumgartner, Site Editor, Light Reading Cable