Light Reading

Google Preps Sale of Motorola Home

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
8/6/2012
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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

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JTiggy
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JTiggy,
User Rank: Light Beer
12/5/2012 | 5:24:40 PM
re: Google Preps Sale of Motorola Home

I for one would hope our government would block a sale to China as having access to our home cable modems would allow them to determine what we could or couldn’t log on to on the net and who we sent/received e-mails from.  This would limit our freedom of speech and directly influence what we were able to have access too.  Hell, they could influence a presidential election which could favor them allowing them to help implement thier influence over our government and how we do business and with whom.   It really bothers me they are buying up all of our industries which we used to come to thier aid in WWII. They don't seem to appreciate that had we not come to their aid they might not be a nation today.  It pleased me to no end that they weren't allowed to buy 3-Com and it was the government that blocked that sale due to national defense.  Please Uncle Sam,  do it again!  I'd like to know where they are getting all their money from to buy everything, only 30 years ago they were still living in the stone ages. If they want to compete in the world market that’s fine but do it fairly (maybe they don't understand our sense of "fair play") and not on the backs of their cheap labor.  Ok, I'll get off my soap box now.

Tyler Durdon
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Tyler Durdon,
User Rank: Light Beer
12/5/2012 | 5:24:40 PM
re: Google Preps Sale of Motorola Home


Ever since the conflict between Google and China that required China's approval of the sale I've been wondering if there was some behind-the-scenes negotiating that might help a Chinese company buy the cable business.  Of course the US gov't would need to be on board too.  Just think about it, a Chinese owned business with active network links into millions of American's homes...  access to your routers...  a foreign hacker's dream.

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:24:39 PM
re: Google Preps Sale of Motorola Home


I totally agree with Craig on this one. If this is how Google decides to proceed it will be because it offers the least path of resistance if expediting a sale is a priority here. JB

Pete Baldwin
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Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:24:39 PM
re: Google Preps Sale of Motorola Home


Freedom of speech? Influence a presidential election? Oh, please.


I can understand a distrust of Huawei but this is way over the top. 

Tyler Durdon
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Tyler Durdon,
User Rank: Light Beer
12/5/2012 | 5:24:37 PM
re: Google Preps Sale of Motorola Home
Some people just can't enjoy a good conspiracy theory.
msilbey
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msilbey,
User Rank: Blogger
12/5/2012 | 5:24:34 PM
re: Google Preps Sale of Motorola Home


Forget the conspiracy. I'd be surprised at this point if any single company bought up all of the Motorola Home assets. Most of the encoding business is out on the west coast. There's the main set-top base in Horsham PA. And the CMTS and network infrastructure group up in Massachussetts. I don't know exactly how it will get parcelled out, but I'd bet the pieces get divvied up to different players. 

Tyler Durdon
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Tyler Durdon,
User Rank: Light Beer
12/5/2012 | 5:24:14 PM
re: Google Preps Sale of Motorola Home


Interesting point, Motorola's CMTS never really took off (even the Motorola Horsham plant uses a lot of Cisco hardware in their labs) the group in Mass. is top-heavy with highy paid execs and not much engineering talent so they'd be a good cheap buy for a competitor just to get them off of the playing field.  The sttop business would be a good buy for any number of people since the wired customer base for cable/FIOS is still very big and still willing to pay for services.  I always thought it would be interesting to see Comcast buy them, or even Verizon. 

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