MOTO & NT: Again?
1:00 AM -- After our story on Monday, an alert Light Reader reminded us that a joint venture between Motorola Inc. (NYSE: MOT) and Nortel Networks Ltd. has happened before -- and failed.
On Feb. 10, 1992, Motorola and Nortel announced a joint venture that would change the face of communications (by giving it a zit). Paul G. Stern, chairman and chief executive officer of Northern Telecom [now Nortel], said in a press release: "MOTOROLA-NORTEL Communications will bring together the leaders in the field, enabling it to provide customers throughout the Americas with world-class radio and switching equipment."
On the board of the new joint venture sat John Roth, one of the few people to accomplish that great Canadian-American dream of destroying a company and then getting paid for it.
The joint venture, as it was spun in 1992, was designed to capitalize on Motorola's cellular radio and Northern Telecom's digital switching technologies.
But the JV didn't last long. John Roth told the Financial Times in 1993: "We thought that (Motorola) would have a stronger radio portfolio than it turned out they actually had."
Another bone of contention, the press points out, was that Motorola loved CDMA and Nortel favored TDMA.
The JV soon failed and each company took its marbles and went home.
In Crain's Chicago Business, on August 23, 1993, the great Adam Lashinsky picked apart the failed bit: "One Motorola Nortel executive says the [joint venture's] personnel were like 'eunuchs' because they had no power to make independent decisions."
An executive quoted in the piece stated that "Every sales meeting had to have three parties to it, and every decision involved essentially a new layer."
Sounds like fun, no?
The context is much different now, but I wonder if some of the same problems might crop up. From our reader, who lived through the first JV:
Basically the problem was that every deal required sign-off from both sides. If Nortel got a "deal" it would be reject by Motorola because there was not enough Motorola equipment. Same held true of Motorola got a "deal". Neither side trusted the other to sell each others equipment.Back then, just like now, both sides were getting their clocks cleaned by Ericsson AB (Nasdaq: ERIC) and DSC Communications (now Alcatel-Lucent (NYSE: ALU)).
So what do you think? Is history going to repeat itself?
— Phil Harvey, News Editor, Light Reading