Feeds

Motorola hints at chip biz sell-off – again

This time, only if it does make a profit

  • alert
  • submit to reddit

Profitability may not be enough to save Motorola's chip operation from being sold, the parent company's chairman and CEO, Chris Galvin, suggests.

Despite a return to profitability, Motorola's government business wing was sold off last September, and Galvin draws parallels between that division and the Semiconductor Products Sector.

"Two years ago we were losing a lot of money in the government business, and we said there is no sense in selling it now or disposing of it now," he said,
at UBS Warburg's Global Telecom Conference, held in New York this week. "We fixed it. We got it generating significant positive cash flow and double-digit pre-tax profits. We sold the [government business division] last September."

The implication is clear: once SPS returns to profitability, there's a real chance that Motorola will seek to boost its finances by ridding itself of the operation.

However, such a plan contradicts comments made by Motorola executives in the summer. In August, Motorola president Robert Growney said that a deadline has been set by which SPS must show that it can start sufficiently contributing to the company's bottom line. Growney would not say how long SPS has to achieve this goal.

And Ed Gams, Motorola's investor relations chief, added: "No segment of the company is sacred in terms of being protected from its obligation to contribute to that level of financial return.

"The present level of financial performance of the segment cannot be tolerated. Improvements are expected.

"There are no sacred cows here."

But Galvin's reference to Motorola's former government sales operation suggests that he can't sell it until it does become profitable again.

The plan appears to centre on getting SPS into a position where Motorola can sensibly make a decision over its future, Galvin said. If SPS "is valued at two, four, or six, or eight times sales, one can decide whether you want that in the portfolio or not," he said. "That's the essence of the plan we are working on right now." ®

Related Stories

Motorola moots Semicon Products Sector sell-off
Apple looks to future - post-Motorola? - PowerPC world
Apple to buy PowerPC from Motorola?

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Choosing a cloud hosting partner with confidence
Download Choosing a Cloud Hosting Provider with Confidence to learn more about cloud computing - the new opportunities and new security challenges.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.