Motorola, Nortel in Wireless Merger Talks

Looking to close the gap on wireless network rivals Nokia and Ericsson,
Schaumburg, Ill.-based Motorola Inc. is exploring plans to
merge its wireless network equipment with Canada’s Nortel Networks , according to published reports.

The negotiations, which was first reported by BusinessWeek, center on
Nortel acquiring Motorola’s wireless division and spinning out an
independent company.

A potential deal to merge the two wireless divisions would put Nortel and
Motorola right back in the race for contracts to develop high-speed wireless

Officials on both sides could not be reached early Friday to discuss the

Nortel Networks, the second-largest telecom equipment maker in North America
(behind Lucent), provides networking solutions and services that support
voice, data, and video transmission over wireless and wireline technologies.

With the depressed state of the telecommunications sector and a declining
stock price, it is not clear how Nortel would finance such a transaction.
In Friday’s early going, Nortel’s stock was trading at $4.80, a shade above
the 52-week low and well off the year-high of $18.75.

Financially, the company has seen better days. For fiscal year ended
Dec. 31, 2001, Nortel’s revenues dipped 37 percent to $17.5 billion,
with net losses before items reaching $24 billion. The loss includes $15.8
billion in restructuring and other non-recurring charges.

Motorola has not been without troubles of its own. Last March, the company
cut 7,000 jobs to deal with the slow growth in its wireless division. Since
December 2000, Motorola laid off about 12,000 employees and announced plans
to reduce overhead expenses.

Motorola sells services that include software-enhanced wireless telephone,
two-way radio and messaging products and systems, as well as networking and
Internet-access products. It also provides systems for the delivery of
interactive digital video, voice and high-speed data solutions for broadband
operators and embedded semiconductor services for customers in the
networking and computing and wireless communications business.

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