Motorola loses suitors for its modem business

Despite Motorola's efforts over the past few months to sell off its modem division to Hayes or Zoom both companies have opted not to purchase the unit. A source close to the company says Motorola is getting out of the modem business because its brand name and reputation have not done much for its modem sales, and this particular business does not play well to the strengths of a large company. In other words, Motorola needs to be quick and streamlined in the execution of its products and needed to be cost-effective, keeping manufacturing costs and overhead down -- qualities not common to many big companies.

Despite Motorola's efforts over the past few months to sell off its modem division to Hayes or Zoom both companies have opted not to purchase the unit.

In October, Motorola Information Systems Group announced its intention to sell parts of its Transmission Products Division's modem business and the manufacturing facility in Huntsville, Alabama, which produces the Surfr modem line used in homes and businesses for Internet access.

“The corporate division has been trying to get out of the [modem] business because it's just not much of a money-maker,” a Motorola spokesperson said.

A source close to the company also said that Motorola was getting out of the modem business because its brand name and reputation had not done much for its modem sales, and this particular business does not play well to the strengths of a large company. In other words, Motorola needed to be quick and streamlined in the execution of its products and needed to be cost-effective, keeping manufacturing costs and overhead down -- qualities not common to many big companies, the source added.

Hayes officials declined to comment, but a Hayes spokesperson confirmed that “they were no longer looking to buy the Motorola division.” Separately, the officials said the merger with Access Beyond will be complete by the end of the year.

Frank Manning, Zoom's president, would not give specific details on why Zoom opted not to buy but said that “we visited them, and they had a good facility and good people, but overall we didn't see that it was a good fit.”

One analyst speculated that the companies made their decisions based on Motorola's terms.

“What Motorola is offering was not anything interesting and valuable, such as the cable modem or soft modem,” said Lisa Pelgrim, a senior analyst at the Telecommunications Industry service at Dataquest Inc., in San Jose, California. “They are keeping the technologies with potential for the future. Also, the company buying the division wouldn't be able to use the Motorola name, and Surfr doesn't have as significant a presence compared to other names out there.”

It is now rumored that contract manufacturers -- companies that build electronic products for other companies and do not specialise in modems -- are interested in buying the Motorola division. According to one source, Jabil Circuit, in St. Petersburg, Florida. -- a manufacturer of electronic circuit boards and systems for companies in the computer, computer peripheral, data communications, automotive, and consumer industries -- is considering buying the division. Jabil officials were unavailable for comment.

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