2 Rumors - 2 Non-Starters For Motorola Handset Division Sell Off

China's ZTE is reportedly in talks with Motorola, as they consider a potential merger or purchase of Motorola's trouble mobile phone business.  There is also rumor and speculation that Nortel run, by Mike Zafirovsky, who helped orchestrate Motorola's comeback with the Razr, might be interested in a merger.

There's a problem with both concepts.  They are both non-starters.  I'll explain the easiest one first.

While it is true that Motorola is heavily invested in China, a possible merger of ZTE with Motorola just would not fly as they could not pass muster with the US SEC.  Coming up with $9 billion in cash is not likely either.  Plus, there would be major issues with Motorola possibly providing sensitive information to the Chinese.

China's ZTE in Cooperation Talks with Motorola

The Nortel option is much more difficult.  Despite the fact that Mike Z at Nortel is the real deal, and once had the chance to turn Motorola all the way around, they are a lot further gone now and their competitors are much more rapidly leaving them in the dust.  Back then Motorola was a strong number 2 in the mobile phone industry.  Today, they risk being eliminated wholesale.

Furthermore, its a cash, research and development problem all over again.  The two companies could benefit a little in merging their infrastructure units together possibly bringing about some cost savings, its not going to be $9 billion in savings to justify the price.  But even more important, the deal would not provide the kind of cash heavy investment that needs to be applied to Motorola to help them take their technology foundation and leverage it into this new century finally.

There's only one company out there with pockets that deep and an interest in what Motorola has and that is Microsoft.  Microsoft could easily do a directbuy of the entire company with cash and do very well putting together their own products with several of Motorola's product lines.  Plus, Microsoft could probably also dust off some of those older technologies and reinvigorate some fresh product lines.  Consider, Google is going around like a fool trying to buy up wireless spectrum.

Hello, Moto is sitting on a fortune in patents and IP relating to a portion of spectrum that is going for ridiculously cheap prices.  Its called paging, but that spectrum and that technology could be applied to something new today.

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