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Mobile

Motorola combining networks, government units

Company hasn't yet said how move will help cut costs, but analyst says it will eliminate redundant R&D.

Motorola, the world's No. 2 cell phone maker, said on Friday it is combining its network equipment business with its government and corporate unit in a bid to cut costs and win new business.

The network unit sells equipment that runs mobile phone networks, a segment that analysts say has become cutthroat because of too many suppliers. The other business sells wireless gear to government and large business clients.

Motorola did not give details about how the combination would help with costs, but said it plans to provide information on the reorganization and related expenses at a later date.

One analyst said the move appeared to make sense but that it was still unclear how much savings it would produce.

"I believe it makes sense because it eliminates the duplicative research and development between the two divisions," said Oppenheimer analyst Lawrence Harris.

"The technologies and the pursuits of the two divisions have been coming closer together because the government unit has been pursuing bids to sell network equipment to public safety agencies and state governments," he said, noting that they previously focused more on selling walkie-talkie radios.

Motorola's shares were down 19 cents at $22.01 on the New York Stock Exchange on Friday.

Greg Brown, president of the government and enterprise business, will run the combined unit and Adrian Nemcek, who ran the network unit for five years and has worked at Motorola for about 36 years, is retiring from the company.

In the fourth quarter, government and enterprise clients represented 17 percent of Motorola's revenue, and the unit increased sales by about 8 percent from the year-earlier period.

The networks business contributed about 14 of fourth-quarter revenue but fell 4 percent from a year earlier.

Motorola said it would stop reporting both segments as separate units after the current quarter.