Motorola Inc is in the early stages of looking into a potential $4.5 billion sale of its television set-top box and network equipment business, according to a Wall Street Journal report.
According to the story, which cites people familiar with the matter, Motorola is in the early stages of seeking buyers for the unit, whose suitors could include private equity firms and other communications equipment makers.
Motorola, which has been losing market share in its cellphone business for years, declined to comment on the report, but said it w
as still focused on its previously stated plan to separate its handset business from the rest of the company.
Analysts said there could be a lot of interest in the home and networks unit, particularly because Motorola has a strong market share in the set-top box segment, where it is bigger than Scientific Atlanta, owned by Cisco Systems Inc .
But RBC analyst Mark Sue said that a divestiture of any of Motorola's other business units could hurt Motorola's money- losing handset business.
The mobile devices business still needs the rest of the businesses to fund it operations. It hasn't really recovered fully yet so it would be a little too early to cut off the lifeline, Sue said.
While growth in the mobile network equipment market has slowed dramatically in recent years, rival gear makers could see Motorola as a way to increase their market share, particularly in the United States.
Avian Securities analyst Matthew Thornton said a $4.5 billion price tag would represent an 18 percent premium over his estimated valuation of $3.8 billion for the home and networks unit, based on operating earnings.
Analysts said that potential suitors could include Ericsson , Samsung Electronics Co Ltd <005930.KS>, Alcatel Lucent SA or Nokia Siemens, a venture of Nokia and Siemens AG .
The story also cited China's Huawei Technologies Co Ltd and UK based Pace Plc as potential buyers.
According to the Wall Street Journal private equity companies looking into a deal include TPG and Silver Lake Partners. TPG declined comment and Silver Lake Partners was not immediately available for comment.
The report said that J.P. Morgan Chase & Co and Goldman Sachs Group Inc are advising Motorola on the possible sale.
Motorola spokeswoman Jennifer Erickson said the company does not comment on rumor or speculation.
Separation into two independent, publicly traded companies (Mobile Devices and Broadband Mobility Solutions, which comprises Enterprise Mobility Solutions and Home and Networks Mobility Solutions) is the publicly stated long-term goal of Motorola, Erickson said. We remain committed to the separation goal and continue to believe that it is the right strategy to position Motorola for long-term success.
Motorola shares were down 11 cents, or 1 percent, at $8.73 in afternoon trading on New York Stock Exchange.
(Reporting by Sinead Carew and Megan Davies in New York and
Jessica Hall; editing by Andre Grenon)