Showing posts with label LG. Show all posts
Showing posts with label LG. Show all posts

Motorola's Icahnic move

Thursday, January 31, 2008

Seems like Motorola has bowed to investor Carl Icahn. The company announced today that it will go for a "structural and strategic realignment" to separate its loss-making mobile division from the rest of the company. This includes possibilities of a spin-off or even a sale. This is something that Mr.Icahn, a 3.3% Motorola stake-holder, has been advocating for sometime now.

You can read some opinions and analysis in this reuters report. While this is not necessarily surprising in the wake of Mr.Icahn's position, I do wish to note a few points -
  • The largest US handset maker may potentially get acquired by an Asian/European competitor. This can weaken US's position in the wireless/telecommunications industry. Further, its position as the US market leader is an extremely attractive proposition to other vendors.
  • In the case of an acquisition by a non-US company, I can see QCOM's position strengthen internally. As a handset vendor, Motorola had vested interests in keeping QCOM at bay in the wireless standards. If the company ceases to exist in this space, then QCOM will likely get unconditional backing from the US wireless industry and perhaps the government as well.
  • With Nokia unlikely to be a buyer, it is further good news for QCOM in terms of increasing its market share. If it is any indication, the recent announcement from Motorola that it will go with QCOM 3G chipsets may be a deliberate positioning effort to bring in more suitors. LG or Samsung will perhaps be most ideal for QCOM's fortunes.
  • Chinese vendors who are having a growing clout in the industry, may post heavy bids to emerge as bigger forces effectively redefining the industry's geopolitical alignment.
  • I can also think of dark horses like Google as buyers.
  • While a spin-off itself may be good for the other two profit-making ventures, it will also enable the new entity to focus on winning back some market share.
I will key in further thoughts as they come to my mind. But it will be an interesting next few months for the wireless industry.

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Posted by Vijay Nagarajan at 9:00 PM 0 comments  

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QCom - A loss... and a win

Wednesday, September 12, 2007

This week has QualComm (QCOM) all over the news again. Yesterday, Motorola came out with the shocker that they were giving the boot to QualComm in favor of Freescale and TI for their 3G offerings. This was an announcement leading the American Technology Group to downgrade QualComm's shares. They had earlier viewed Motorola as a positive, earning the San-Diego company up to $700 million in sales.

This news did come as a dampener for QualComm investors, but they were in for a pleasant surprise today. A court of appeals has granted a stay on the ITC ban until a final appeals ruling is given. Quite a rare victory for the embattled company! More importantly, this comes as a relief to all the phone-manufacturers and carriers caught in the cross-fire. This being said, it does not still exonerate QualComm from the implications of the ban. The company ultimately has to settle with BroadCom, but this is a quick-fix solution for all others who risked losing competency in the wake of the ban.

Few points to note -
  • Though absent from the beneficiaries list, Sprint will be able to sell phones from any of the manufacturers who won the stay today.
  • QualComm chips cannot be imported directly into the US. Not a major issue, but highlights the fact that this stay merely seeks to limit the damage caused to the others.
  • QualComm does not have to settle with BroadCom and will perhaps let the law take its course.

In other QualComm news, their case against Nokia went to courts yesterday as well. So, there will be more interesting legal outcomes this year. One thing that I want to re-iterate is that this ruling will not hamper the ruthless efforts to break the company's business model. Even the phone-manufacturers who won the stay will want more competitors in the chip-vendor space. Note that Motorola, one of the beneficiaries is already moving away from QualComm.

More analysis to come soon.

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Posted by Vijay Nagarajan at 6:29 PM 0 comments  

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