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New Motorola Broadband Communications Sector Ready To Lead the Convergence Of Voice, Video And Data Technologies
Motorola, Inc. (NYSE: MOT) announced that the company and General Instrument Corporation (NYSE: GIC) completed their previously announced merger following GIC shareholder approval at a special meeting held Wednesday. In the merger, valued at approximately $17 billion, each share of General Instrument was converted into 0.575 shares of Motorola common stock. This merger positions Motorola as a leader in the convergence of voice, video and data technologies. The combined company will focus on broadband solutions, which deliver interactive television, the Internet and telephone services over wired and wireless networks. ""The completion of the merger between Motorola and General Instrument has created the Motorola Broadband Communications Sector, a leading end-to-end solutions provider for the exploding broadband access marketplace,"" said Christopher B. Galvin, Chairman and Chief Executive Officer of Motorola, Inc. ""Motorola has been a global leader in providing integrated communications solutions for the person, the work team, and the automobile. With this merger, Motorola is also poised to lead the transition to converged services in the home."" Headed by Edward D. Breen, former Chairman and Chief Executive Officer of General Instrument, the Broadband Communications Sector is the newest sector within Motorola's Communications Enterprise. The focus of the sector is to deliver a full range of integrated and interactive broadband access solutions to the home along with ""home hubs"" to handle high-speed Internet access and video entertainment, and carrier-quality voice services. The Motorola Broadband Communications Sector is among the world's leading suppliers of digital and analog set-top terminals and systems for wired and wireless cable television networks, cable modems and modem network routers, circuit-switched and packet- based hybrid fiber/coaxial (HFC) voice solutions, and HFC network transmission systems used by cable operators. In addition, it is a leading provider of digital satellite systems for programmers, direct-to-home satellite networks and private networks for business communications. As a result of the merger, Motorola now also holds approximately an 80 percent stake, based on the number of shares currently outstanding, of Next Level Communications, Inc. Next Level is a provider of broadband communications systems that enable telephone companies to cost-effectively deliver a full suite of voice, video and data services over the existing copper wire telephone infrastructure. The transaction will be accounted for as a pooling of interests. Motorola said it intends that the merger will not be dilutive in 2000 as various potential synergies related to cost reduction and sales growth opportunities are brought forward into this year. The merger is expected to strengthen earnings per share in 2001 and beyond. ""The newly merged company offers broadband operators the technologies and capabilities they need to achieve their network strategies by combining GI's leadership in converged voice, video and datanetworks with Motorola's global reach and brand identity,"" said Breen. ""As a leader in broadband access, we're expanding our worldwide presence and leveraging cost-saving opportunities while we focus on products and technologies to deliver converged services over cable lines and wireless networks."" The Broadband Communications Sector is positioned to offer not only access technologies, but also gateways for managing the flow of traffic from circuit-switched and packet-based backbone networks; gatekeepers to facilitate call-processing; and IP-based applications and services for the integrated network of the future. The sector expects to drive the transformation of the current hierarchically structured telecommunications network into a peer-to-peer distributed model that facilitates broader communication and expanded service offerings for the broadband marketplace. ""Motorola believes that cable industry consolidation will continue and that customers will want to build strategic partnerships with suppliers capable of providing end-to-end systems, which deliver today's solutions and the new revenue-generating services of tomorrow,"" said Merle L. Gilmore, Executive Vice President, Motorola and President of the Communications Enterprise. ""This merger is about growth and catapults Motorola into a solid position in the high-growth broadband business."" About Motorola Motorola is a global leader in providing integrated communications solutions and embedded electronic solutions. These include: - Software-enhanced wireless telephone, two-way radio, messaging and satellite communications products and systems, as well as networking and Internet-access products, for consumers, network operators, and commercial, government and industrial customers. - Embedded semiconductor solutions for customers in networking, transportation, wireless communications and imaging and entertainment markets. - Embedded electronic systems for automotive, communications, imaging, manufacturing systems, computer and consumer markets. - Digital and analog systems and set-top terminals for broadband cable television operators. Motorola's and General Instrument's combined sales on a pro forma basis in 1998 were $31.3 billion.