Subject: [NEXTEL-1] Motorola, Siemens end swap talks

From: Marcel <[email-masked]>
Date: Thu, 20 Feb 2003 05:26:30 -0500

Motorola, Siemens end swap talks
by Sarah Cohen
Updated 05:46 PM EST, Feb-18-2003

Motorola Inc. and Siemens AG have called off talks about swapping wireless
infrastructure for wireless handsets.

Motorola spokesman Steven Hendricks said Tuesday, Feb. 18, "Negotiations
between the two companies are no longer relevant." Motorola had been talking to
many wireless networking infrastructure players about a possible deal, he said, but
now the Schaumburg, Ill.-based company plans to grow its mobile infrastructure
business organically.

Siemens declined to comment.

Crain's Chicago Business reported in October 2002 that Motorola would exchange
its wireless infrastructure business for Siemens' phone handset unit. According to
Crain's, Siemens, a German electronics maker, asked Motorola to throw in an
undisclosed cash payment as part of the trade. Motorola reportedly intended to
keep its largest network customer, Nextel Communications Inc. of Reston, Va.

Casey C. Ryan, an analyst with Wells Fargo Securities LLC, said it was
Siemens that pulled out of the deal. "Motorola was willing to sell, but Siemens
wasn't willing to buy," he said.

Motorola's portfolio of infrastructure products is somewhat weak, Ryan said.
Motorola also would have lost a chipset customer by acquiring Siemens' handsets,
he added. "There wasn't much value in the swap."

Banking sources say the hottest targets for those seeking to bulk up on wireless
networking equipment are Lucent Technologies Inc. of Murray Hill, N.J.; Nortel
Networks Corp. of Brampton, Ont.; and LM Ericsson of Sweden. But these
companies are not likely to sell, some bankers said, because wireless operations
carry relatively high margins and are central to their businesses.

Potential consolidators are Motorola, Siemens and NEC Corp. of Japan. Cisco
Systems Inc. of San Jose, Calif., and Nokia Oyj of Finland are better able to make
acquisitions but lack the interest, some bankers said.

John Bucher, an analyst with Gerard Klauer Mattison & Co., argues that
Motorola's wireless infrastructure technology is underrated. "The biggest concerns
about these products are six years out of date,"Bucher said. "Lots of people seem
to think Motorola lacks base station switches. But there aren't a lot of customers
interested in buying base station switches these days."

Motorola told Reuters Feb. 18 that it hopes to be the No. 2 vendor of wireless
infrastructure equipment, behind Ericsson, by 2004 or 2005.

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