The industry insiders I talked to believe that this move, which keeps Home under the leadership of a cable guy, is an indication that Google (Nasdaq: GOOG) is starting to get anxious about unloading the unit, with some saying it's likely a buyer might appear by this fall.
Google Chairman Eric Schmidt tried to put a good face on things by telling shareholders earlier this month that Google bought Motorola Mobility for more than just its patents, but there aren't many folks we can find that actually believe that, particularly when it comes to Moto's cable business. We speculated in March that Google would eventually sell off Moto's cable business and identified some potential suitors. (See Why Google Will Dump Moto's Cable Biz.)
Now that Google's closed the deal, it's time to refresh that list, based on what we think could happen and what we're being told might happen as various parties jockey for position. From our discussions, it's quite clear that the cable operators want Motorola Home in friendly hands (i.e., not Google's) and some assurances that they'll have someone to keep Cisco Systems Inc. (Nasdaq: CSCO) honest. Here's our latest list of candidates.
Although it sounded pretty crazy at first, the idea that Edward Breen (the ex-chief of what used to be Motorola Inc. and General Instrument Corp.) might get the band back together (two of his former Moto comrades, Dan Moloney and Geoff Roman, will soon be free agents) to make a play for Home and create what would amount to the second coming of General Instrument, seems to make more and more sense as the weeks and months go by. But there's a lot that would need to happen, and happen very fast, for this to come together. Breen's still running Tyco International Ltd. (NYSE: TYC; London: TYI), and he'd need to line up the financing. If the MSOs truly want to keep Motorola Home in the cable family and keep Cisco in check, then perhaps Comcast Ventures and Time Warner Investments will put some money in to help make it happen. (See Will Moto Go Back to the Future?.)
This is a relatively new idea that's starting to circulate, though it's unclear if CommScope Inc. and its Chairman, cable vet Frank Drendel, would make a run on its own or team up with Breen's group to grab a stake in the new company. But CommScope's backed by a firm with deep pockets, The Carlyle Group LLC , and has been on a bit of an M&A tear lately. It has just reorganized to break out a broadband division, so perhaps it might see some sense in pulling the trigger on a big deal that would significantly raise its cable profile. (See CommScope Reorgs Business Units.)
Juniper Networks Inc. (NYSE: JNPR) already sells routers to the cable guys, but it's flirted with doing much more, as it once had a cable modem termination system (CMTS) in its lineup. There's not a huge product overlap between the Juniper and Motorola Home, and Juniper could serve as a nice cable counter to Cisco if it could find a way to expand its cable equipment portfolio. (See Juniper Does Docsis (Again) .)
Buying Motorola Home would make Pace plc the No. 1 supplier of set-tops in the U.S. and allow it to get into a bunch of new businesses. Pace has been mentioned as a possible candidate, but it will likely need help to come up with enough cash to land the Motorola division.
Yes, it's still being mentioned in the discussion, despite the fact that the U.S. government, not to mention some of the domestic cable guys, just flat-out don't trust the China-based giant. Although it's been cutting back in the U.S. recently, Huawei Technologies Co. Ltd. 's been anxious to establish a sizable domestic cable business and Moto Home would fit the bill. But even if it really wants the unit, the barriers appear to be so high that Huawei is viewed as the dark horse. (See Huawei Packs On Cable Muscle , More Bother for Huawei, ZTE and Huawei Cuts Some US Staff.)
Agree or disagree with what we've put on the table? Have some ideas of your own? Weigh in on the message board to share your thoughts.
— Jeff Baumgartner, Site Editor, Light Reading Cable