Motorola Puts IT Business on the Block

Motorola Inc. of Schaumberg, Ill., announced May 15 it is "exploring strategic alternatives, including a potential divestiture," of its government communication and information technology unit, the Integrated Information Systems Group, based in Scottsdale, Ariz.

Ed Breen, president of the company's Networks Sector, said the group is performing well financially, with a solid base of military, federal and prime contractor customers and growth opportunities in its target markets.

But the company is considering a sale because the unit's business has "moved further from the strategic core of Motorola's [commercial] markets," according to a company statement. The company's current struggles in the commercial marketplace also played a role in the decision, the statement read.

"It is a really small part of the business, not a huge part of what Motorola's doing, but it's [got] a nice part of the mobile radio market," said Tom Meagher, vice president of equity research with BB&T Capital Markets, Richmond, Va.

The division features three business groups supporting the communications technology and information technology needs of military, government and commercial customers. Business offerings include technologies, products and systems for secure information, aerospace communication, information assurance, situational awareness and integrated communication. It employs approximately 2,800 people.
The unit holds contracts with the Defense Department, other government agencies and international ministries of defense that rely on highly integrated communication and information assurance products, systems, software and solutions.

Motorola would not provide details of the IT group's financial performance, except to say it was "exceeding its profit forecast and plan this year," but Meagher estimated the IT group at somewhere under $500 million in annual revenues. Overall, Motorola had 2000 sales of $37.6 billion.

While there has been some speculation that Raytheon Co. or Lockheed Martin Corp. might be interested in acquiring the Motorola division, Meagher said he thought that L-3 Communications Corp. of New York or General Dynamics Corp. of Falls Church, Va., might be more likely suitors.