Aiming to expand its position outside the cellphone market, Motorola Inc said on Tuesday that it would pay US$3.9 billion for Symbol Technologies Inc, a maker of scanners and other wireless technology used by manufacturers, retailers and wholesalers.
With growth in the retail cellphone market starting to show signs of slowing, handset makers like Motorola are looking for ways to sell more of their wireless technology to corporate customers and governments.
To do that, Motorola hopes to tap Symbol's customer list, which includes Coca-Cola, FedEx and the US Postal Service, to sell scanning devices and handheld computers for warehouses and also the wireless networks, walkie-talkies and cellphones that Motorola makes.
"It's a customer base to die for," said Gregory Brown, president of Motorola's Networks and Enterprise business. "The story today is not a cellular handset story. It's around expanding the product portfolio beyond cellular handsets."
Motorola said it will pay Symbol shareholders US$15 a share in cash, 18 percent more than the Symbol's closing price of US$12.71 last Friday, before speculation about a possible merger arose.
Shares of Symbol rose US$0.08 on Tuesday, to US$14.75 in regular trading. Motorola's stock fell US$0.02, to US$24.93.
If the deal closes by early next year, as the companies expect, Motorola will become one of the largest sellers of handheld scanners and devices that connect to networks wirelessly.
Last year Symbol, which has its headquarters in Holtsville, New York, had sales of US$1.8 billion, a 1.9 percent increase from 2004. The company earned US$32.2 million in profits, 61 percent less than in 2004.
The addition of Symbol would more than double Motorola's business selling handheld computers, radio frequency identification tags and other equipment used to track products in factories, warehouses and in stores, Brown said.
Motorola has also been producing more phones for white-collar workers who want to gain access to the Internet and e-mail outside the office. The company's line of "Q" phones aims to rival RIM, which makes the popular BlackBerry, and Treo. By combining these phones with Symbol's handsets, Motorola could make even bigger inroads into the market serving corporate customers, analysts said.
"They need Symbol's brand recognition and technology to leapfrog Nokia," said Christin Armacost, a telecommunications analyst at Lazard Capital Markets.
At the same time, she said, "Motorola is going to bring their carrier relationships to help Symbol."
The companies, though, have some overlapping technology, and they will have to design software that allows their various devices to speak to each other, industry analysts said. They must also consider how or whether to put scanning technology on Motorola phones, which are considerably smaller than Symbol's handheld devices.
Still, with Symbol, Motorola could become the only firm capable of bridging the gap between cellphones and local area networks in homes, offices and elsewhere.
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