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Article
Eating the Elephant in One Gulp

Zebra's move to acquire Motorola Solutions is either a visionary and bold move or fraught with danger, disappointment and compressing of potential. Eating in big gulps can lead to GERD.


Full Article Below -
Untitled Document

Zebras and elephants are both extremely attractive, but distinct, animals. However, during the last few years this Zebra and that elephant (Motorola) seem to have more in common than we see in the animal kingdom. Combining the two could have some significant benefits for the market as well as for the new Zebra.

Zebra1 is borrowing big to acquire Moto’s RFID and mobility business (read Bloomberg article here, however, maybe there should be a caution on the enthusiasm of the financial community. Financial guys who make money on all transactions think deals of this type are good while knowing nothing about customers and how they will respond).

Moto will sell the business to Zebra, with an expected closing date by the end of 2014. A big gamble, but kind of logical for Zebra on some level. Not sure, besides some short-term cash, what Moto really gets out of this. Moto bought Symbol, as we all remember, a few years back and turned the rudderless company into a powerhouse in the RFID market.

Moto says, “Just as with the separation of Motorola Solutions and Mobility in 2011, this transaction is all about separating two innovative businesses with increasingly divergent profiles.” We (ChainLink) mourned the demise of the once stellar cellular phone business, but Moto got a pretty good deal from Google. Now shrinkage. Once a mega-name in the electronics industry, Moto seems to be shrinking into oblivion. I wish them well and hope I am wrong. Government business has been shrinking, not growing, as a general market sector over the last few years. However, when some of the municipal sectors that Moto focuses on such as police and other response sectors do invest, they invest big. So there is a chance that with focus, something good can come out of this.

On the Zebra side the gambit could pay off with lots of creativity and, more importantly, execution. Sales, channels, sales, sales, and more sales have to be the mantra. Just don’t be too fast in canceling products. I find companies can be too aggressive in cost cutting in the product areas before they truly understand what the market craves.

With big debt, will there be money for innovation when the next big thing comes along? Will Zebra be able to keep up?

Based on what I saw at Live! last week, they had one of the more exciting exhibits. Add the many interesting things we have seen in the Moto labs in Schaumburg, IL, and there are some truly magical ideas that could spark real growth for Zebra in the market.

Link to announcement:

http://newsroom.motorolasolutions.com/Press-Releases/Zebra-Technologies-to-Acquire-Enterprise-Business-from-Motorola-Solutions-for-3-45-Billion-49b6.aspx

Transaction Highlights

  • Zebra Technologies will pay Motorola Solutions $3.45B to purchase Motorola Solutions’ Enterprise business.
  • Key assets include the Enterprise Mobile Computing, Data Capture Solutions and RFID businesses along with the Enterprise portion of the Services & Solutions business.    
  • We expect approximately 4,500 Motorola Solutions employees to transfer to Zebra as part of the deal. Key executives include Girish Rishi, Bob Sanders (Global Enterprise Solutions) and Jim Welch (Global Enterprise Sales).
  • About 3,300 granted and pending patents will transfer to Zebra as part of the deal.
  • Motorola Solutions intends to return a majority of the proceeds from the transactions to its shareholders in a timely fashion.

Other information related to today’s transaction, including executive pictures and biographies, can be found at http://www.zebra.com/acquires-motorola-enterprise.

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1 Zebra current stock info http://finance.yahoo.com/q?s=ZBRA -- Return to article text above


To view other articles from this issue of the brief, click here.


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