Archive for Tuesday, December 14, 2004

Motorola shares rise on Sprint-Nextel talk

December 14, 2004


— Motorola Inc.'s shares bounced back Monday after falling sharply at the end of last week amid conflicting views on how the telecommunications equipment maker would fare if Sprint Corp. bought Nextel Communications, its largest customer.

The 5 percent stock surge came as the company said it would realign its businesses into four groups -- focused on personal devices, networks, government and enterprise, and the connected home. The run-up in shares began before the announcement.

CEO Ed Zander said the organizational changes, which were not disclosed in detail, would improve Motorola's focus and operating efficiency.

"With a more streamlined structure, Motorola will boost its flexibility and speed to capitalize on new opportunities allowing us to deliver seamless mobility to our customers and consumers worldwide," he said.

The changes will take effect beginning Jan. 1. The company said it expected to provide additional details during the first quarter.

Shares in the cell-phone maker rose 86 cents Monday to close at $17.15 on the New York Stock Exchange, making up much of Friday's 7.8 percent decline.

Numerous analysts said last week that the rumored Sprint-Nextel pairing would be bad for Motorola because it would jeopardize its lucrative, decadelong business ties with Nextel, in which Motorola was an early investor.

That view was disputed Monday by Albert Lin, an American Technology Research analyst, who said the market's "knee-jerk" selloff of Motorola stock Friday overlooked the fact Motorola potentially could sell more phones if the rumored merger took place.

At issue is Motorola's future role in a company that provides nearly 20 percent of its cell-phone and wireless network infrastructure sales.

Closing share prices Monday for Sprint Corp. and Nextel Communications Inc., said to be approaching a merger that could be announced this week:¢ Sprint Corp.: $24.44, up 30 cents, or 1.24 percent.¢ Nextel: $29.99, up 23 cents, or 0.77 percent.

Motorola, which is based in Schaumburg, Ill., specializes in digital wireless technology called iDEN, which powers Nextel's push-to-talk phones, whereas Sprint's wireless network relies on the CDMA standard.

Sprint only recently began offering its first Motorola phone to customers, according to Lin, but might become a larger customer as a result of Motorola's innovative series of new products.

"With Nextel ... Sprint would almost have to consider Motorola as a supplier," the analyst said in a note to investors. "Sprint is a new opportunity for Motorola that is far larger than Nextel."

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