Motorola sell off: Huawei looking to pick up pieces
April 07th, 2010 - 09:25 am ET by C. D.
Now that Motorola has confirmed their intension of to split their Mobile and decoder divisions into an independent entity, the question is who would be a suitable buyer. Among the options, the Chinese company Huawei is exploring the possibility of acquiring these divisions.
During February 2010, the American group Motorola decided to adjust the scope of their operations, allowing them to separate their mobile phone activities which could now be potentially resold at an attractive price after previously spending a few years in decline.
Planned for the first quarter of 2011, this break up should create an independent branch which will bring together mobile telephony and digital decoders, while Motorola will remain as a telecom equipment manufacturer and professional mobile services.
Market watchers are looking to see which players may be interested in acquiring this new company while also looking for what opportunities may exist for Motorola who will remains as a telecom equipment manufacturer. Among these, one company may be particularly interested: the Chinese Huawei Technologies, who manufactures both mobile telephone elements and handsets, are not hiding their intention of soon becoming a large player in mobile telephony, a sector which until now has been limited to Smartphone’s.
Looking for guarantees But succeeding with such a large acquisition on American soil isn’t an easy task for a Chinese company. An attempt to purchase 3com was blocked at a high level, with the interference at times seen from the Chinese government regularly being sighted as an issue, although the company denies that this would take place.
The Financial Times indicates that Huawei are currently studying how they may be able to acquire the future company spun off by Motorola, looking notably for a way of getting around their application being blocked. One method being looked at is through the use of contracts which leaves the existing structure independent and under control from the United States.
Huawei has pointed out that they are ready to do everything possible to answer any governmental worries about China if this allows them to get a firm foothold in the American market.
It appears that the Chinese company could possibly be the only candidate looking at Motorola’s activities, with Ericsson preferring to look at acquiring parts of the Canadian Nortel, while European equipment manufacturers are not in a favourable economical situation for making such large acquisitions.
Will one of the American mobile industries leaders (Motorola is the leading company for mobile sales in the United States) come under (maybe) control of the Chinese in the near future?