Motorola Makes IPTV Buy

Motorola continued its expansion into IPTV today with the acquisition of Modulus Video, a privately held maker of MPEG-4 advanced video coding (ATV) compression systems.

Founded in 2002, Modulus’ ATV encoders will provide Motorola with a software-centric platform that manages bandwidth, delivering standard- and high-definition services for the IPTV, cable, broadcast and satellite markets.

The Sunnyvale, Calif.-based Modulus will become a wholly owned subsidiary of Motorola. Financial terms of the transaction were not disclosed but the deal is expected to close no later than by the end of the third quarter.

“As consumers demand more high-definition video and interactive services, the need for advanced compression technology is increasingly important,” Dan Moloney, president of Motorola’s home and networks mobility division, said in a statement.

Last month, Motorola acquired Terayon Communication Systems for $1.80 per share or approximately $140 million. Terayon creates video-processing solutions to optimize bandwidth and enable content to be delivered based on the regional and local interest of viewers.

The Modolus and Terayon deals follow a string of IPTV acquisitions by Motorola last year, including a $200 million deal for broadband gear maker Netopia. The Schaumberg, Ill.-based Motorola also acquired IPTV set-top maker Kreatel of Sweden; Tut Systems, a video distribution company; and Broadbus, which provides video-on-demand for multiple platforms.

“Motorola is committed to offering an integrated, end-to-end video portfolio designed to meet the current and next-generation requirements of operators,” Moloney said. “As part of its advanced real-time video encoding products, Modulus Video has a powerful architecture and product development framework that is well suited for continued technological advancement.”

Motorola hopes the acquisitions will help reverse the recent slide in the company’s performance. Last month it revised its 2007 first-quarter guidance, due to much lower-than-anticipated sales at the company’s mobile devices business. The company followed by announcing lower earnings results.

The troubles in the mobile devices division were attributed to price competition in emerging markets, particularly India, Africa and South Asia. In some cases, Motorola chose not to get into a price war in those regions.

But rough earnings has not stymied Motorola’s mobile division. The company this week presented its lineup of new devices, including a slimmer RAZR2 phone, its ROKR Z6 and Z8 music player/phones and two new Q smartphones.

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