Schaumburg, Ill., -- October 6, 2003 – Motorola, Inc. (NYSE: MOT) Chairman and Chief Executive Officer Christopher Galvin today announced that the company intends to separate its semiconductor operations into a publicly traded company. This action reflects Motorola’s intention to increase its focus on communications and integrated electronic systems, as well as create an exciting opportunity for the company’s Semiconductor Products Sector (SPS) as an independent semiconductor company with its own focused strategy. Motorola has not finalized details of the transaction.
Over the last several years, SPS has successfully executed an “asset light” business model that differentiates it from other semiconductor players. This business model combines a balance of shared cost in developing advanced technologies, revenue from the licensing of intellectual property and more new product offerings than it has in the past across its leading positions in wireless, networking, transportation and standard products. With its own publicly traded equity, SPS will have the opportunity to pursue acquisitions, should it so choose, of additional strategic product lines and technology using semiconductor equity valuations instead of the blended equity valuation of Motorola. In addition, the semiconductor industry cycle appears to be in an upswing; therefore, Motorola believes the time is right to take these actions.
Motorola is considering an initial public offering (IPO) of a portion of SPS, followed by a distribution of remaining shares to shareholders in a tax-free manner, subject to Motorola board approval, favorable market conditions, regulatory approvals and other customary conditions.
Galvin said, “Over the past several months, we have carefully weighed the best way to optimize the long-term potential of Motorola’s semiconductor business with the leverage we would gain by concentrating our resources on our communications products and integrated electronic systems businesses. After completing our four-month-long technology and strategic reviews in August, I recommended to the board of directors in September that Motorola focus its future on retaining and augmenting all five Motorola sectors that compose our communications products and integrated electronic systems businesses and that our ‘asset light’ semiconductor business could prosper as a separate entity. Our board of directors has given its full support to this recommendation.”
“We are embarking on the creation of a new company, and we are excited about the opportunity ahead of us," said Scott Anderson, president of Motorola SPS. “We have a differentiated business model in ‘asset light’; an experienced, talented management team; an energetic workforce; and strategic and productivity initiatives already in place that are driving a sustainable difference in our approach to the semiconductor market. We believe SPS is well positioned to increase its leadership in the end markets it serves, including the networking, communications, transportation and industrial markets."
“Motorola’s board of directors has accepted management’s recommendation,” said John Pepper, presiding director of Motorola’s board of directors. “As the company’s governance body, we are enthusiastic about the intended separation of its Semiconductor Products Sector into a public entity and the enhanced future prospects of Motorola as a focused communications and integrated electronic systems company. Motorola is committed to its remaining businesses and to serving our customers with a forward-looking portfolio of solutions.”
Motorola’s remaining portfolio includes:
About Motorola's Semiconductor Products Sector
As the world's #1 producer of embedded processors, Motorola's Semiconductor Products Sector creates DigitalDNA™ system-on-chip solutions for a connected world. Our strong focus on wireless communications and networking enables customers to develop smarter, simpler, safer and more synchronized products for the person, work team, home and automobile. Motorola's worldwide semiconductor sales were $4.8 billion (USD) in 2002. For more information: www.motorola.com/semiconductors.
About Motorola
Motorola, Inc. (NYSE:MOT) is a global leader in wireless, automotive and broadband communications. Sales in 2002 were $27.3 billion. Motorola is a global corporate citizen dedicated to ethical business practices and pioneering important innovations that make things smarter and life better, honored traditions that began when the company was founded 75 years ago. For more information: http://www.motorola.com/.