Motorola Creates New Divisions in Advance of Split

The Wall Street Journal is reporting that Motorola has divided itself its home and networking business into three units, rather than two. In March Motorola said it would spin off its handset business in the wake of poor performance. Now, according to WSJ, it has further split its home and networking unit into: a set-top-box and home-networking business, a networking gear business, and the handset broadband business. Analysts view the move as a precursor to selling those divisions, although the company denied this in the article.

The set-top-box and home networking business appears to hold a lot of promise for a rich valuation as information technology companies seek to get a toehold in the home market; Cisco’s $6.9 billion buy of Scientific Atlanta is the most obvious example. Companies such as Dell and HP are eying the convergence of consumer technology with information technology, and they aren’t blind to the fact that a set-top box is a perfect way to marry the two. As much as I want to hope that my PC will send content directly to my TV, that’s not happening anytime soon — despite cool services such as Apple TV or Amazon’s streaming service.

On the cellular networking  and broadband access side, the existing market for telecommunications equipment isn’t robust, prompting mergers as well as expansion into other areas by industry players. But Motorola is still a big fish in that small pond of major telco gear makers. If WiMAX takes off, Motorola could find itself holding a desirable asset, especially for a company such as Ericsson, which has so far stayed out of providing any WiMAX equipment.

As a side note, I checked with Motorola to see where its growing RFID and corporate radio assets might fall within this new organizational structure, and I will update the story when I hear back.