Videocon May Buy Troubled Motorola

Wednesday, April 02, 2008: Motorola is going through hard time and recently announced splitting of its business into two independent units. Now there are reports that Videocon has expressed interest in buying the mobile handset business of the company. Despite the interest shown by Venugopal Dhoot, chairman, Videocon group, it will depend much if the US-based firm is willing to sell the business. Optimistic Videocon is reportedly working on appointing a global investment bank to accommodate the deal.

Looking at the options Motorola is left with, it might be interested in selling out its mobile business as it did not perform well in the last financial year. Analysing the performance of Motorola in Q4, in January 2008, Martin Garner, mobile director, Ovum, commented, "After the Q3 results, if there is no significant movement on the handset portfolio, the improvement we saw in Q3 would be a dead-cat bounce. That's what we have in these results, and what is horrifying is the lack of optimism. This suggests that there was not enough useful new product in Motorola's cupboard (possibly some products in the pipeline have been cancelled) and Ed Zander's mid-2007 recovery bet has gone wrong." "The handset volumes are well below Motorola's normal seasonal pattern. Incoming CEO Greg Brown pointed to heavy competition, gaps in the portfolio (3G, China and other emerging markets), new product development being late and weakening demand for existing products (KRZR, RAZR2). On the latter, it's not clear if this was driven by US consumer conditions," says Garner. Realising the opportunity, Videocon has expressed its desire to bid for the company. Now, how would Videocon benefit from the losing business of Motorola remains to be seen. However, one clear advantage Videocon would have with this acquisition is there are more mobile phones sold in the world than TV sets, and having a wing of its own will definitely put Videocon in a stronger position to foray into the booming mobile segment. The best part of the deal could be, Videocon may not have to empty their pockets to get Motorola; as per analysts, Motorola's handset business is not more than $3.8 billion. Now, even Abhishek Bachchan may not have any 'idea' to increase sales of the handsets and thus save the company. Even in India, Motorola seems to be struggling hard to get fan base like that of Nokia or Sony. The irony is, despite launching Linux-powered handsets, the company has failed to gain accolades from the FOSS community.

Source: eyfnetwork