Google is selling Motorola Mobility's TV set-top business for $2.35
billion, lightening the load that the Internet search leader took on
earlier this year when it completed the biggest acquisition in its
The cash-and-stock deal announced late Wednesday will turn
over Motorola's set-top division to Arris Group Inc., a relatively small
provider of high-speed Internet equipment that is looking to become a
bigger player in the delivery of video. Investors applauded the move,
driving up Arris' stock by nearly 17 percent.
Google's decision to
jettison the set-top boxes comes seven months after the Mountain View,
Calif., company took control of Motorola Mobility Holdings in a $12.4
The set-top boxes were never a big allure for
Google, although the company is interested in finding ways to pipe its
service on to TVs so it can sell more advertising.
Motorola for its portfolio of more than 17,000 mobile patents. Those
form an arsenal that it can use in a fierce battle that has broken out
over intellectual property as smartphones and tablet computers have
emerged as hot commodities in recent years.
Motorola also makes
smartphones and tablets, a manufacturing business that Google will
retain, despite lingering concerns on Wall Street about the hardware
shrinking Google's profit margins and possibly alienating other device
makers that use the company's Android software.
Besides not being a
natural fit for Google, Motorola's set-top box also has become a
potentially expensive liability. Digital video recorder pioneer TiVo
Inc. is seeking billions of dollars in damages in a lawsuit alleging
that Motorola's boxes infringed on its patents. Those claims are
scheduled to go to trial next year in federal court in Texas.
they declined to provide specifics, Arris Group executives told
analysts in a Wednesday conference call that Google still must cover
most of the bill for any damages or settlement that TiVo might win.
already has negotiated about $1 billion in combined settlements in
other patent-infringement cases it has brought against other companies,
including Dish Network Corp., AT&T Inc. and Verizon Communications.
proposed sale of Motorola's set-top division calls for Google to
receive $2.05 billion in cash and $300 million worth of Arris stock. If
the deal wins regulatory approval, Arris Group expects to take over the
division before the end of June.
Google will also pare its
expenses, something likely to please investors concerned about Motorola
being a drag on the company's earnings. Arris said about 7,000 people
work in Motorola's set-top division. Google ended September with about
53,500 employees, including 17,400 who worked on the Motorola side of
its operations. More than 20,000 people worked at Motorola Mobility when
Google became the owner in late May, but the payroll was slashed as
part of an effort to pare the losses that have been piling up within
Motorola as its once popular cellphones lost market share to Apple Inc.
and Samsung Electronics.
But Motorola's set-top business had been making money, according to Google, though the company didn't say how much.
the past year ending in September, Motorola's set-top operations
generated $3.4 billion in revenue. That makes it twice as big as Arris
Group, whose revenue totaled $1.3 billion during the same period. Arris
Group, which is based Suwanee, Ga., had earned $39 million through the
nine months of last year after suffering a loss of nearly $13 million
for all of 2011.
"This represents a great leap forward for Arris," CEO Bob Stanzione said during Wednesday's conference call.
Arris' stock surged $2.46 to $17 in extended trading Wednesday while Google's stock dipped $2.61 to $717.50.
other half of the old Motorola Inc., Motorola Solutions Inc., remains
an independent company. Based in Schaumburg, Ill., it sells
communications equipment to government and corporate customers.