Motorola last week announced plans to purchase Symbol Technologies for US$3.9 billion in stock. Two Motorola executives Tuesday talked to Matt Hamblen about the deal: Marc Rothman, senior vice president for finance and business development in the company's networks and enterprise division, and John DeFeo, corporate vice president for enterprise mobility products.
Excerpts from that interview follow:
What can you tell one customer I interviewed who was anxious about what will happen to Symbol engineers and their innovation record with this proposed acquisition?
Rothman: It's a great question. This is a story of growth, where we are buying this business from Symbol for several big reasons. One, they are the category leader in terms of product portfolio. They have 900-plus patents in the U.S. and a [distribution] channel that's second to none in terms of customers, with 12,000-plus points of distribution. But to get to your question, there are about 850 engineers in Symbol Technologies today, and we're counting on them to take us to next level of enhancing the portfolio that they have today.
So, Symbol will still have its current headquarters in Holtsville under Motorola?
Rothman: The proposal is that it will be a wholly owned subsidiary and you do that for a variety of tax and legal reasons. The Symbol headquarters in Holtsville will be the cornerstone of our enterprise business.
What we're doing at Motorola is really a start-up in the area of mobile computing, while Symbol has been in the business for decades, with $1.8 billion in annual sales. We're going to leverage this transaction to take it to a different level.
Do you think Symbol's accounting fraud problems are behind it, after a US$37 million SEC fine in 2004 and fraud charges against 11 Symbol executives?
Rothman: I believe it's behind them and it's not a concern for Motorola.
In terms of integrating Symbol and Motorola products, analysts have noted that Motorola recently introduced the HC700 rugged handheld and believe that product will overlap with Symbol products. Has it sold much and will it perhaps go away?
DeFeo: The HC700 family of products has been very successful for Motorola. There's been a number of customer wins. The ones we've disclosed publicly remain,and we've had several new sizeable customer wins.
Does it duplicate what Symbol does, though?
Rothman: I wouldn't look at it that way. It's very complementary and synergistic with what Symbol does in terms of a product portfolio. So it's something we'll study and look at over the next few months in terms of making sure we have every appropriate tier of products for our customers. We've made no decision about what products to rationalize at this point in time.
DeFeo: The bottom line is that it's too soon to say. Our intention is that we intend to support all our customers, whatever the outcome of this analysis. We intend to go the extra mile and go beyond what's necessary to support customers of the HC700 and all the products in our portfolio as we go forward.
And you mean that for Symbol's products too?
DeFeo: Of course. We can't speak for Symbol during this pending acquisition period, but I'm sure if you spoke to Symbol, they'd say the same.
There's a lot of industry talk about the convergence of Wi-Fi and cellular wireless technologies. Was capitalizing on that convergence a big reason for the acquisition of Symbol?
DeFeo: Great question. One of the primary motivations for the transaction was not just the scale and distribution capability of Symbol, but the innovation, the R&D capabilities and the intellectual property of the combined entity that will be unsurpassed when it comes to the sorts of the technologies you are referring to. The Motorola CN620, a dual-mode Wi-Fi and GSM cellular handset, has been being trialed and has demonstrated our interest in voice over wireless LAN and seamless mobility. We believe that Symbol Technologies brings similar and very complimentary innovative capabilities to Motorola. Arguably, Symbol Technologies as one of the original inventors of wireless LAN really jump-starts our efforts toward creating converged solutions for the enterprise market. So we're very, very excited about that aspect of the acquisition.
With all your innovation dreams, are you hoping to become the Cisco giant killer, or maybe it's Nokia or some other company?
DeFeo: Look, our relationship with Cisco is just multidimensional and complex. I mean, we're both very large, innovative technology companies. There are areas where we work together and areas where we compete. We expect that to continue going forward. Cisco is a respected competitor and in some cases a good partner. We don't see that changing going forward.
But in this area of convergence of Wi-Fi and cellular, who will be the big competition?
DeFeo: We think the combined entity is uniquely, uniquely positioned in this world of technologies, whether it's around Wi-Fi and wired access or when you think about cellular technologies. Let's not forget 4G and WiMax technologies that Motorola has arguably established a leadership position in. We think the convergence that's occurring in the world between the different wireless technologies and between wired and wireless technologies plays extremely well to our strengths and really leverages the combined assets of Motorola and Symbol Technologies.