The Prepaid Press - April 15, 2008 - (Page 11)

PREPAID WIRELESS April 15 · 2008 - 11 Motorola to Split Two Companies to Result from page 1 reminiscent of the communicator used in Star Trek. The StarTac sold for $1,000 for 2-3 years until lower cost competitors hit the market. Ed Zander was made president/CEO in 2004, replacing Christopher Galvin, the grandson of Motorola’s founder, ending the family’s 75-year control of the company. Under Zander, Motorola introduced the Razr, and began recovering market share. Razr created the category of slim phones in 2004, selling initially for $500. But, the Razr has lost most of its appeal, and is now free with some calling plans. It appears to have been a one hit wonder, so Zander was replaced by Brown in November of last year. In the fourth quarter of 2007, Motorola’s handset shipments crashed, dropping 38% while all its major competitors reported increases. the handset business will probably be worth $1.69 a share next year, while other analysts have pegged the other division at around $7.49. Motorola officials declined to comment on the effect of the split on earnings or what will happen to the Motorola brand name. premise equipment for residential and commercial wireless network system access. In the announcement, Motorola president Greg Brown said that one company will continue to focus on handsets while the other will sell network equipment, cable TV set-top boxes and two-way radios. These latter businesses, Broadband & Mobility Solutions, are growing faster and are more profitable than the handset business. Motorola said Brown will stay with this division, and look for a new chief executive officer for the phone business. “Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus…” Losses Mount Motorola’s handset business lost $388 million last quarter, while the Broadband & Mobility Solutions had a profit of $192 million on 11 percent sales growth, and the unit making radios and scanners had a profit of $451 million and a 35 percent revenue increase. Analysts believe that, given current conditions, Split Plan Based on current plans, Brown said the creation of the two stand-alone businesses is expected to take the form of a tax-free distribution to Motorola’s shareholders resulting in shareholders holding shares of two independent and publiclytraded companies: • The Mobile Devices business is one of the biggest in multi-mode, multi-band communications products and technologies. The business designs, manufactures and sells mobile handsets and accessories globally with integrated software solutions that incorporate the latest personal communications technologies. It also licenses a portfolio of intellectual property. • The Broadband & Mobility Solutions business includes Motorola’s Enterprise Mobility, Government and Public Safety, and Home and Networks businesses. These businesses manufacture, design, integrate, and service voice and data communication solutions and wireless broadband networks for enterprises and government and public safety customers worldwide. These businesses also provide end-to-end digital and Internet Protocol (IP) video solutions, cellular and high speed broadband network infrastructure, cable set-top receivers, and associated customer While the Motorola divestiture plays itself out, the U.S. handset market may be in a state of confusion with competitors like Nokia fighting hard for market share. our people and our intellectual property, and expect that the Mobile Devices business will be well-positioned to regain market leadership as a focused, independent company.” The completion of any separation transaction would be subject to certain customary conditions, including implementation of inter-company agreements, filing of required documents with the Securities and Exchange Commission and receipt of an opinion of counsel or a ruling from the Internal Revenue Service as to the taxfree nature of any transaction. The Company expects that the separation of its businesses, if consummated, would take place in 2009. Split Causes Confusion The company said the split will occur sometime in 2009, giving Brown time to try and build up the Mobile Devices unit before the split. Some analysts have said that the split could take 18 months to happen, and that the conditions could be very different from what they are today. Others suggested that the decision to split could make it easier for Motorola to negotiate some other deal, such as a joint venture or an outright sale of the Mobile Devices division. In the meantime, both divisions will be in a state of suspense. “Our priorities have not changed with today’s announcement,” added Brown. “We remain committed to improving the performance of our Mobile Devices business by delivering compelling products that meet the needs of customers and consumers around the world. As part of that effort, we have undertaken a global search for a new chief executive officer for the Mobile Devices business. We believe strongly in our brand, Impact on Prepaid Wireless While the Motorola divestiture plays itself out, the U.S. handset market may be in a state of confusion with competitors like Nokia fighting hard for market share. Since prepaid is one of the fastest growing segments of wireless, it is likely that handsets will be used to try and leverage prepaid market share. This could result in a plethora of new handsets, designed for noncontractual prepaid services, with features that appeal to those users. www.tuyo.com/dealers http://www.tuyo.com/dealers

Table of Contents Feed for the Digital Edition of The Prepaid Press - April 15, 2008

The Prepaid Press - April 15, 2008 Motorola to Split Mobile Payments: The Saga Continues Contents The Retske Report: Election Year and Woody Hayes Regulatory Rundown: 2008 First Quarter Mobile Update 5 Minutes with Mark Herrington tppEXPO’08 Spotlight New Handsets Announced at CTIA Prepaid Wireless in Brief Prepaid Wireless Roundup Virgin Mobile Reports Earnings of 6 Cents Movida Files Chapter 11 LiveWire Mobile Acquires Groove Mobile Boost Selects Vesta for Transactions RadioShack to Offer Trumpet Mobile Service Virgin Offers New Pay as You Go Plans Book Review: Webster’s New World Telecom Dictionary Management Changes at IDT Spot Rates Calling Cards in Brief The State of Prepaid Technology: Productive Coexistence FTC Asks Court to Halt Prepaid Calling Card Scam Louisiana Community Mulls Tax on Prepaid Cards Pactolus Wins VON Magazine Award iBasis Lowers Pakistan Rate for Pingo The Legal Line Biometric Update: Keep Your Shirt On AccountNow Ends Upfront Fees Evolution Benefits Acquires SmartFlex Payments in Brief NetSpend to Offer Bill Payment and Top-up Union Bank Introduces Contactless Card Ingenico Announces Development Kit Prepaid 101: Stupid Card Tricks PLS Offering Walk-In Bill Payment Spend Gift Cards ASAP Credit Card Breach at Hannaford Bros. NACS Withdraws Opposition to Tobacco Bill Study Finds Gift Card Packaging Increases Sales NACS Names International VP Inflatable Display Provides Inexpensive Signage Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - April 15, 2008

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