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Mobile

Motorola sells wireless operator assets

The company plans on raising nearly $2 billion in cash by selling off its stake in telephone service providers in Mexico and Hong Kong.

Motorola plans on raising nearly $2 billion in cash by selling off its stake in telephone service providers in Mexico and Hong Kong, company executives said Monday.

The pending sales, expected to be completed by the third quarter, will add to the $1 billion Motorola said it already got by divesting itself from other cellular service providers in Brazil, Egypt, Israel, Jordan and Pakistan.

With the emergence of several leading providers, including Vodaphone, Deutsche Telekom and NTT DoCoMo and the explosion in handset sales worldwide, it's time for the likes of Motorola to divest and focus on propping up its handset sale market share, which has been slumping, U.S. Bancorp Piper Jaffray analyst Samuel May said.

"From (Motorola's) perspective, they made a lot of investments over the past 15 years to seed the market," May said. "You can make the argument that the market doesn't need to be seeded anymore."

With it's newfound cash, Motorola will only say it will use it for general corporate purposes.

May and others say it's time for the company to focus on its handset sales. The company has seen its market share slip in recent years. Motorola shipped 60 million phones, giving it a 14.6 percent market share in 2000.

It had a nearly 17 percent share in 1999, according to market research firm Gartner.

But one major problem for the company is profits. Motorola announced at the end of February that it didn't expect to meet it's projected first-quarter sales of $8.8 billion or its 12 cents per share in earnings. It blamed the economic slowdown in the United States and internal "inventory corrections" that combined could lead to an operating loss for the quarter, according to a statement.