By acquiring Motorola Home, Arris is grabbing a next-generation consumer video products and services business from Google. Arris will use the hardware to support its existing product offering while also building out new products for broadband. The transaction will also increase the company's patent portfolio and provide a license for many Motorola Mobility patents.

Robert Stanzione, chairman and CEO of Arris, expects the acquisition to create a leader in the video, data , and voice products, as well as future generation IP-based broadband products. He expects ever-expanding consumer demand for bandwidth to continue to drive growth across cloud and network technologies the company provides to power entertainment products and services.

Shedding Profits?

"Acquiring Motorola Home builds on Arris' history, creating a global player with significant footprint, revenue and cash flow," Stanzione said. "It also adds expertise in video and a larger presence in the home to our core strengths in voice and data, ensuring we are even better positioned to capitalize on and manage the evolution toward multi-screen home entertainment."

Motorola Home is a profitable business that generated revenues of $3.4 billion for the trailing four quarters ended Sept. 30. Once Arris integrates the Motorola Home technology, the company will boast more than 500 customers in 70 countries. The acquisition will more than triple Arris pro forma combined revenue to about $4.7 billion for the trailing four-quarter period ending Sept. 30. The combination is expected to generate approximately $100 million to $125 million in annual cost synergies.

"Our Home business has been a vibrant part of Motorola Mobility's portfolio, innovating while delivering strong financial performance," said Dennis Woodside, CEO of Motorola Mobility, the Google subsidiary that is the parent of Motorola Home. "The industry faces its biggest technology transformation, and together Arris and Motorola will be able to accelerate related innovations such as the introduction of the IP-connected home environments that service providers need and that their consumers crave."

Overpaying for Patents

Roger Entner, principal analyst at Recon Analytics, told us Google's move to shed Motorola home was both surprising and not. The reason it's not surprising is that Google is a software company, not a hardware company, he said, but then why did Google buy Motorola?

"It's perplexing because Google really wants to get into the home and Motorola set-top boxes have 40 percent market share. So this could have very easily moved away from Motorola into the homes of many people and provide them with Google TV. Instead they prefer to partner with others to provide that and then do it over the top," Entner said.

"Maybe after all they just bought Motorola for the patents, which would have been very expensive. There still is this paranoia about patents, but I think Google overbought."

Google acquired Motorola for $12.5 billion earlier this year.
 

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