Motorola, Inc. Company Profile Publication Date: 11 Aug 2008 www.datamonitor.com Datamonitor USA 245 5th Avenue 4th Floor New York, NY 10016 USA Datamonitor Europe Charles House 108-110 Finchley Road London NW3 5JJ United Kingdom Datamonitor Germany Kastor & Pollux Platz der Einheit 1 60327 Frankfurt Deutschland Datamonitor Hong Kong 2802-2803 Admiralty Centre Tower 1 18 Harcourt Road Hong Kong t:+1 212 686 7400 f:+1 212 686 2626 e:usinfo@datamonitor.com t:+44 20 7675 7000 f:+44 20 7675 7500 e:eurinfo@datamonitor.com t:+49 69 9754 4517 f:+49 69 9754 4900 e:deinfo@datamonitor.com t:+852 2520 1177 f:+852 2520 1165 e:hkinfo@datamonitor.com Motorola, Inc. ABOUT DATAMONITOR Datamonitor is a leading business information company specializing in industry analysis. 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TABLE OF CONTENTS TABLE OF CONTENTS Company Overview..............................................................................................4 Key Facts...............................................................................................................4 Business Description...........................................................................................5 History...................................................................................................................7 Key Employees...................................................................................................13 Key Employee Biographies................................................................................14 Major Products and Services............................................................................24 Revenue Analysis...............................................................................................26 SWOT Analysis...................................................................................................28 Top Competitors.................................................................................................35 Company View.....................................................................................................36 Locations and Subsidiaries...............................................................................38 Motorola, Inc. © Datamonitor Page 3 Motorola, Inc. Company Overview COMPANY OVERVIEW Motorola provides wireless handsets, wireless communications systems, and end-to-end broadband systems. It is one of the major providers of end-to-end networks used for the delivery of video, voice, and data services over hybrid fiber coaxial networks. The company primarily operates in the US. It is headquartered in Schaumburg, Illinois and employs 66,000 people. The company recorded revenues of $36,622 million during the financial year ended December 2007 (FY2007), a decrease of 14.5% over 2006. The decrease in net sales was due to a $9.4 billion decrease in net sales of the mobile devices segment. The operating loss of the company was $553 million during FY2007, compared to the operating profit of $4,092 million in 2006. The net loss was $49 million in FY2007, compared to the net profit of $3,661 million in 2006. KEY FACTS Head Office Motorola, Inc. 1303 East Algonquin Road Schaumburg Illinois 60196 USA Phone 1 847 576 5000 Fax 1 847 576 5372 Web Address http://www.mot.com Revenue / turnover 36,622.0 (USD Mn) Financial Year End December Employees 66,000 New York Ticker MOT Motorola, Inc. © Datamonitor Page 4 Motorola, Inc. Business Description BUSINESS DESCRIPTION Motorola builds and markets products, services and applications that make simple and seamless connections to people, information and entertainment possible through broadband, embedded systems and wireless networks. The company provides wireless handsets, wireless accessories, digital entertainment devices, wireless access systems, voice and data communications systems, and enterprise mobility products. The company operates in the US, China, the UK, Germany, Israel and Singapore. Motorola operates through three business divisions: mobile devices, home and networks mobility, and enterprise mobility solutions. The mobile devices segment designs, manufactures, sells and services wireless handsets with integrated software and accessory products, and licenses intellectual property. Their wireless subscriber product comprises wireless handsets with related software and accessory products. The company has structured mobile device product portfolio and development into four primary product segments: mass market, feature, multimedia and productivity. The mass market product segment focuses on voice-centric devices with targeted features. The feature product segment focuses on delivering iconic, fashionable phones with high-end features. The multimedia product segment is focused on the convergence of voice capabilities with multimedia experiences on a single mobile device. The productivity product segment is growing due to increasing demand for robust wireless handsets and email on the mobile. In 2007, the company began shipping flagship RAZR2 devices with Crystal Talk, a proprietary technology that automatically adjusts audio quality based on ambient noise conditions to provide the optimal conversational experience. The company markets its products worldwide to carriers and consumers through direct sales, distributors, dealers, retailers and, in certain markets, through licensees. The largest distributor of the company is Brightstar Corporation. The largest customers of the segment include Sprint Nextel, AT&T, Verizon, China Mobile and America Movil. The company’s handsets are mostly manufactured in Asia. Its largest manufacturing facilities are located in China, Singapore and Brazil. Motorola also uses several electronics manufacturing suppliers and original design manufacturers to enhance its manufacturing capabilities. The home and networks mobility business designs, manufactures, sells, installs and services: digital video, internet protocol (IP) video and broadcast network interactive set-tops (digital entertainment devices), video delivery solutions, broadband access infrastructure systems, and associated data and voice customer premise equipment (broadband gateways) to cable television and telecom service providers, and wireless access systems (wireless networks), including cellular infrastructure systems and wireless broadband systems, to wireless service providers. In the home business, the segment is a provider of networks used for the delivery of video, data and voice services over hybrid fiber coaxial (HFC) networks, digital subscriber line (DSL) and passive optical networks (PON). The company’s portfolio includes: Moving Picture Experts Group MPEG video encoding equipment for standard-definition and high-definition television (HD); video processing and multiplexing systems; and video-on-demand, switched digital video and conditional access solutions used by network operators and programmers to deliver video programming. Motorola, Inc. © Datamonitor Page 5 Motorola, Inc. Business Description The company provides a broad array of digital entertainment devices supporting analog, digital and IP video delivery including HD and digital video recording (DVR) applications. In the wireless networks business, the segment provides cellular networks, including radio base stations, base station controllers, associated software and services, application platforms and third-party switching for CDMA, GSM, iDEN and UMTS technologies. The segment also offers a portfolio of WiMAX products to create mobile IP broadband access. The segment’s products are marketed primarily to cable television operators, television programmers, telecom operators, wireless service providers and other communications providers worldwide and are sold primarily by the company’s sales personnel. The segment’s largest customers include Comcast, Verizon, KDDI (a service provider in Japan), China Mobile and Sprint Nextel. The company’s design, integration, manufacturing and distribution centers are located in Arlington Heights and Schaumburg, Illinois; Chandler and Tempe, Arizona; Fort Worth, Texas; Swindon, England; Arad, Israel; Hangzhou and Tianjin, China; Munich, Taunusstein and Berlin, Germany; and Penang, Malaysia. The enterprise mobility solutions segment designs, manufactures, sells, installs and services analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and enterprise mobility solutions to a wide range of enterprise markets, including government and public safety agencies (government and public safety market) as well as retail, utility, transportation, manufacturing, healthcare and other commercial customers (collectively referred to as the commercial enterprise market). In the government and public safety market, Motorola is the provider of advanced mission-critical systems worldwide, with more than 65 years of experience in custom, rugged devices; public safety-grade private networks; sophisticated encryption technology; interoperable voice and broadband data; and complex network design, optimization and implementation services. In the commercial enterprise market, the company’s products include advanced data capture products, mobile computing platforms and software management tools, wireless infrastructure, and radio frequency identification (RFID) infrastructure and tags, and are sold as both integrated solutions and individual devices. The largest of the segment’s customers are the US Government, Scansource, IBM, Ingram Micro and Wal-Mart. The company’s largest resellers and distributors are Scansource, IBM and Ingram Micro, which primarily sell to the commercial enterprise market. In January 2008, Motorola announced that it is evaluating alternatives for the structural and strategic realignment of the Mobile Devices business to regain its global market leadership and enhance shareholder value. This may include the separation of the mobile devices business from Motorola’s other businesses to permit each to grow and better serve their customers. Later, in March 2008, the company’s Board of Directors commenced a process to create two independent, publicly-traded companies, mobile devices business, and broadband and mobility solutions business. The company expects that the separation of its businesses would take place in 2009. Motorola’s research and development laboratories are organized into discrete centers of excellence in key research areas such as networks research, physical realization research, embedded systems research, wireless and solutions research, human interaction research, and applications research. Motorola, Inc. © Datamonitor Page 6 Motorola, Inc. History HISTORY Motorola was founded in 1928 as Galvin Manufacturing by Paul and Joseph Galvin. The company produced battery eliminators, which enabled battery operated radios to function on ordinary household current. In the 1930s, the company launched the first auto radio under the Motorola brand. During the 1950s and 1960s, the company expanded into the production of semiconductors for other manufacturers. In 1967, Motorola expanded into Australia, Canada, France, Hong Kong, Israel, Italy, Japan, Malaysia, Mexico, Puerto Rico, South Korea, Taiwan, the UK and West Germany. In 1973, Motorola demonstrated a design for the DynaTAC (Dynamic Adaptive Total Area Coverage) portable radio telephone. This was the prototype of the world’s first commercial portable telephone using cellular technology. The first Motorola microprocessor was introduced in 1974. In the 1980s, the company entered the communications sector. It supplied more than 50,000 Pocket Bell pagers to Nippon in Japan in 1983, and thereafter, entered into several deals with other communication companies. In 1991, the company developed a range of technologies for non-voice wireless messaging and multi-media products. In 1994, Motorola developed its first commercial digital radio system that integrated paging, data communications, voice dispatch and wireless telephones in a single radio network and a single handset. Towards the end of the 1990s, the company undertook a restructuring plan. In 2000, Motorola merged with General Instruments. In 2001, Motorola acquired RiverDelta Networks, a provider of carrier-class broadband routing, switching, cable modem termination system (CMTS), and service management solutions. The company acquired NetPlane Systems and the Internet infrastructure business of Conexant Systems in 2003. In the same year, Motorola acquired Winphoria Networks, a core infrastructure provider of next generation packet-based mobile switching centers for wireless networks. During 2004, Motorola acquired Quantum Bridge Communications, a provider of fiber to the premises solutions based in Andover, Massachusetts. Later, in 2004, Motorola spun off its semiconductor products division as Freescale Semiconductor in an initial public offering on the New York Stock Exchange. Also, the company acquired MeshNetworks, a privately-held leading developer of mobile mesh networking and position location technologies. It also acquired CRISNET, a privately-held, leading developer of advanced records management and related systems for criminal justice and public safety customers. At the start of 2005, Motorola acquired privately-held Ucentric Systems, a Massachusetts-based provider of media networking software.This acquisition enabled Motorola to market connected home software solutions to third party service providers and consumer electronics manufacturers. Motorola announced the launch of a new 3G Development Center in China in mid 2005. At the end of 2005, Motorola, Inc. © Datamonitor Page 7 Motorola, Inc. History the company acquired Melco Mobile communication Europe, a subsidiary of Mitsubishi Electric Corporation. In 2006, Motorola acquired cable network technology assets from Broadband Innovations (BI), a privately held San Diego-based developer of radio frequency (RF) and digital technologies. The company also announced a 10 year partnership with Eastman Kodak for cross licensing and marketing alliance relating to mobile imaging. The connected home solutions division of Motorola completed the acquisition of Kreatel Communications, a developer of innovative IP based digital set-top boxes. Motorola signed an agreement to acquire Orthogon systems to strengthen its presence in high performance fixed wireless solutions. In 2006, the company reached an agreement to acquire TTP communications. The company also announced plans for a manufacturing facility in India with an initial investment of $30 million. The company sold its automotive electronics business to Continental, a leading automotive supplier, for approximately $1 billion in 2006. In the same year, the company along with Movistar launched its first ’Global Flagship Store’ in downtown Shanghai. Movistar is a major mobile phone operator owned by Telefónica Móviles. It also launched M-channel, an information service which lets Movistar’s clients access news items, sports and entertainment directly from the start-up screen on their terminal. The company also launched G24 EDGE, a Versatile Wireless Module for the M2M Market; i670 model mobile device; and Motofone hand set in the same year. Motorola and Yahoo! agreed to distribute Yahoo! Go for Mobile on tens of millions of new Motorola mobile devices. Wipro and Motorola formed a joint venture to deliver managed services in 2006. In the same year, the company acquired Broadbus Technologies, a provider of content on-demand technologies. Motorola introduced incident scene management solutions for public safety and government users and released FOMA M2501 (M2501), a high-speed downlink packet access (HSDPA) card, a PC card. In 2006, the company started a new research and development center at Hyderabad, India. The company acquired NextNet Wireless, a former Clearwire Corporation subsidiary and provider of OFDM-based non-line-ofsight ("NLOS") wireless broadband infrastructure equipment. Motorola launched Moto Q PRO Solution in January 2007 to deliver security, functionality and services for enterprise users. During the same period, Comcast and Motorola expanded their relationship with a next-generation digital set-top deal. In the same month, the company acquired Symbol Technologies. Motorola secured India’s first Universal Mobile Telecommunications Service (UMTS) cellular network contract from Mahanagar Telephone Nigam Limited (MTNL) during the same period. In January 2007, the company completed the acquisition of Good Technology for approximately $500 million in cash. Good Technology provides enterprise mobile computing software and services. In February 2007, the company completed the acquisition of Netopia, a broadband equipment provider for DSL customers, for approximately $200 million in cash. In March 2007, the company Motorola, Inc. © Datamonitor Page 8 Motorola, Inc. History acquired Tut Systems, which delivers industry-leading content processing and distribution products for deploying next-generation video and Internet Protocol (IP) services over broadband networks. Motorola and ECI Telecom announced a new strategic relationship in April 2007 pairing ECI’s formidable IP DSLAM portfolio with Motorola’s innovative and market-leading Fiber-to-the-Node (FTTN) and Fiber-to-the-Premises (FTTP) solutions. In the same month, Motorola and Terayon Communication Systems, engaged in creation of video processing solutions, entered into a definitive merger agreement, under which Motorola will acquire all of the outstanding shares of Terayon’s common stock for $1.8 per share in cash. Motorola signed a definitive merger agreement with Modulus Video in May 2007. Modulus Video is a leader and innovator in MPEG-4 Advanced Video Coding (AVC) compression systems designed for delivery of high value video content in the IPTV, cable, broadcast and satellite marketplace. In May 2007, Motorola announced that based on an estimate of the votes cast at its annual meeting of stockholders held in Chicago, the stockholders have re-elected Motorola’s Board of Directors and did not elect Carl Icahn, a private investor who had sought a seat on the company’s board. In the same month, the company signed a distribution agreement with Tai Full Technologies Corporation, which would enable wider access to Motorola’s broad range of embedded communications computing products to original equipment manufacturers (OEMs) in Taiwan. In the following month, June 2007, Motorola signed a distribution agreement with Dragon Technology Distribution (HK) to meet increasing demand for open, standards- based AdvancedTCA and MicroTCATM based products in China. In the same month, Motorola won a contract from Marubeni Corporation to provide a TETRA (TErrestrial Trunked RAdio) digital radio communications system to the Taiwan Taoyuan International Airport (formerly Chiang Kai Shek Airport) rail transit network. In July 2007, Motorola completed its acquisition of Modulus Video, a privately-held company. Modulus Video is an innovator in MPEG-4 Advanced Video Coding (AVC) compression systems designed for delivery of high value video content in the IPTV, cable, broadcast and satellite marketplace. In the same month, Motorola has signed a definitive merger agreement to acquire privately held Leapstone Systems. Leapstone is a communications software developer that provides a unified platform for rapidly creating, managing and delivering converged video, voice and data service bundles across multiple networks and devices. Subsequently, Motorola, and Microsoft extended their relationship, which enabled joint partners to develop Microsoft Dynamics-based applications for select Motorola mobile computers. Also, the company partnered with National Basketball Association (NBA) for a multi-year marketing partnership. In the same month, July 2007, Motorola completed its acquisition of Terayon Communication Systems. Motorola acquired all of the outstanding shares of Terayon’s common stock for $1.80 per share in cash. Motorola signed a contract worth $394 million with China Mobile Communications Corporation (CMCC) for GSM network expansion in August 2007. In the same month, the company completed the acquisition of Leapstone Systems. In September 2007, Emerson and Motorola, entered into a definitive agreement under which Emerson would acquire Motorola’s Embedded Communications Computing (ECC) business for $350 million in cash. Motorola, Inc. © Datamonitor Page 9 Motorola, Inc. History In October 2007, Motorola secured two contracts for WiMAX network infrastructure from Taiwan’s Far EasTone Telecom (FET) as part of the operator’s role in the national M-Taiwan project. In the same month, Sony Ericsson and Motorola signed a definitive agreement under which Motorola would acquire a 50% interest in UI Holdings, the parent company of UIQ Technology, which is currently wholly owned by Sony Ericsson. In the same month, through Motorola Ventures, its strategic venture capital arm, Motorola made an equity investment in Siimpel Corporation. Siimpel is a developer and manufacturer of silicon MicroElectroMechanical System (MEMS) based solutions for mobile imaging applications. In November 2007, the company’s subsidiary MI, Inc launched a tender offer to acquire a controlling interest in Vertex Standard, a global provider of 2-way radio communication solutions. Motorola also completed the testing of 3G femtocell solution and has started trialing the solution with a major European operator in the Europe, Middle East, and Africa region. In the same month, the company opened inaugurated research and development complex in Beijing, China. Also, the company received approval from China Banking Regulatory Commission for the establishment of its own finance company in China. Motorola entered into an agreement with Mobilink for the deployment of WiMAX access network for the operator (Mobilink) in Pakistan in December 2007. During the same time, Motorola launched G24-Lite in its G24 Machine-to-Machine (M2M) wireless modules, enabling increased scalability of M2M applications. The RFID division of the Enterprise Mobility business and Intelleflex entered into strategic relationship for the development and delivery of extended capability RFID solutions by both the companies. Also, the company’s subsidiary MI, Inc. extended its tender offer duration to acquire controlling stake in Vertex Standard. Motorola and Metrologic Instruments along with their subsidiaries resolved all outstanding patent infringement disputes through an agreement. The company expanded its ROKR family product through the addition of ROKR E8 mobile device, the EQ5, and EQ7 wireless speaker systems and new stereo headsets, in January 2008. Subsequently, the company signed a definitive agreement to acquire Soundbuzz, a privately pan-Asian music provider. The company through Motorola Ventures, its strategic venture capital arm, made a strategic investment in INSIDE Contactless, a provider of contactless payment chips and near field communications (NFC) technologies for mobile devices. Also, Motorola completed the tender offer to acquire controlling interest in Vertex Standard for approximately JPY12 billion in cash. After the settlement of the offer, the company owns around 78% of Vertex Standard. The company extended its relation with Qualcomm for making chipsets into certain UMTS 3G handsets by end of 2008 and in 2009. In the same month, the company initiated exploring structural and strategic realignment opportunities to enable its mobile device business recapture its global market share and to enhance shareholder value. In January 2008, Motorola announced that it is evaluating alternatives for the structural and strategic realignment of Mobile Devices business to better equip it to recapture global market leadership and to enhance shareholder value. This may include the separation of the mobile devices business from Motorola’s other businesses to permit each to grow and better serve their customers. In February 2008, Motorola released its first 3G femtocell customer premises equipment (CPE), the first two units from a portfolio of CPEs that will be commercially available in the second half of 2008. In the same month, the company through Motorola Ventures, its strategic venture capital arm, made Motorola, Inc. © Datamonitor Page 10 Motorola, Inc. History a strategic investment in DesignArt Networks, a supplier of silicon system-on-chip (SoC) solutions for WiMAX radio access network infrastructure. BAA and Emirates airlines selected Motorola RFID Solution for Heathrow Airport. In the same month, Motorola completed its acquisition of Soundbuzz, a leading pan-Asian music provider. Motorola launched its full line of DOCSIS 3.0-based customer premises equipment (CPE) designed to deliver high-capacity cable voice and data services. Motorola Technology planned investments to expand its global two-way radio centre of excellence in Malaysia. Motorola signed a $335 million turnkey contract in March 2008 to deploy and manage a 2G/3G mobile communications network for Zain in Saudi Arabia.The Enterprise Mobility business of Motorola released its AP-7131, the industry’s first tri-radio 802.11n access point (AP) featuring Motorola’s new adaptive AP architecture. Motorola, through Motorola Ventures, its strategic venture capital arm, made a strategic investment in INVIDI Technologies Corporation, one of the leaders in advanced addressable advertising for the television industry. Swisscom through its Hospitality Services subsidiary has signed a distribution agreement with Motorola to deploy mT2a PowerBroadband system in partner hotels across Europe and North America. Motorola signed a $165 million WiMAX 802.16e infrastructure contract with Etihad Atheeb Telecommunication Company (Atheeb) in March 2008 to enable the new service provider to offer broadband services to subscribers in the Kingdom of Saudi Arabia. Later, in March 2008, the company’s Board of Directors commenced a process to create two independent, publicly-traded companies, mobile devices business, and broadband and mobility solutions business. The company expects that the separation of its businesses would take place in 2009. In April 2008, Motorola expanded its portfolio of MOTOwi4 Fixed Point-to-Point (PTP) Wireless Ethernet Bridges to include the PTP 45600 Integrated and Connectorized models. Motorola and Carl Icahn reached an agreement under which William R. Hambrecht, Founder, Chairman And Chief Executive Officer of WR Hambrecht + Co. and co-founder of Hambrecht & Quist, and Keith Meister, a Managing Director of the Icahn investment funds and Principal Executive Officer of Icahn Enterprises, will be nominated for election to Motorola’s Board of Directors at the 2008 Annual Meeting of Shareholders and included in the company’s 2008 proxy statement. In addition, Mr. Meister has been appointed to serve on the Board, effective immediately. The company also expanded the Motorola wi4 WiMAX access point portfolio with the introduction of the new 802.16e Wave 2-ready WAP 450. In the same month, Motorola through Motorola Ventures, made an equity investment in VirtualLogix, a maker of virtualization software for communications devices and infrastructure equipment. Motorola introduced the Motorola Netopia 7000 Series VDSL2 Gateways in April 2008. The 7000 Series gateways are designed to deliver high-speed data and IPTV services over ultra-broadband networks that are easy for service providers to install and manage. The company staked its claim in the Korea’s 3G market with the introduction of the new Z8m handset. Motorola achieved DOCSIS 3.0 certification for the Motorola SURFboard SB6120 and SBV6220 cable modems and DOCSIS 3.0 bronze qualification for the Motorola BSR 64000 cable modem termination system (CMTS)/edge router in May 2008. The company introduced its portfolio of Motorola, Inc. © Datamonitor Page 11 Motorola, Inc. History advanced advertising delivery technologies for the cable industry that leverages both operators’ existing Motorola products as well as new product offerings to support a wide range of advertising initiatives. Motorola introduced the Motorola SmartStream Terminal Data Collector (STDC), a solution for remote collection and presentation of set-top diagnostic information. Motorola launched a modular embedded Multimedia Terminal Adapter (M-eMTA) in May 2008, that provides cost-effective, flexible, multi-line IP voice and high-speed data (HSD) services all in one device. Motorola introduced the smallest body-worn TETRA Covert Radio, the TCR1000 that provides fully featured TETRA radio functions to users in covert operations. Later, in the same month, a consortium comprising Eircom, Motorola and Sigma Wireless (TETRA Ireland) has secured Ireland’s National Digital Radio Services contract. The 8-year ‘build-own-operate’ contract would start with the roll-out of services in an area covering parts of Dublin (including the port and airport). Motorola made available Good Mobility Suite version 6.0 in June 2008, which includes a new managed-service virtual private network (VPN) as well as an enhanced device management and security platform. In the same month, Motorola was selected by TDF, a European provider of network services to broadcasters and telecom operators, to design and deploy 802.16e WiMAX networks for several regions in France where HDRR, a TDF subsidiary, holds WiMAX frequency licenses. Later, Motorola’s WiMAX WAP 25400 base station achieved the WiMAX Forum Certified seal of approval by passing required interoperability and conformance tests as outlined by the WiMAX Forum. Motorola launched its expanded Broadband Access Network portfolio in June 2008, adding significant Fiber Deep capabilities to Motorola’s hybrid fiber coaxial (HFC) platform. The expansion would allow MSOs worldwide to drive fiber closer to the home while protecting their infrastructure investments and minimizing downtime and installation costs. Motorola announced contracts worth $28 million with Viet Nam Posts and Telecommunications (VNPT) Group for the expansion of the Vinaphone GSM network across 12 Northern provinces in Viet Nam in a signing ceremony held in Washington. In July 2008, Motorola through Motorola Ventures, its strategic venture capital arm, invested in Apprion, a market leader in open industrial wireless networks and applications. In the same month, the Enterprise Mobility business of Motorola, released the 802.11n planning tools featuring predictive networking capabilities, Motorola’s 11n LANPlanner. In the same month, Motorola signed a definitive agreement to acquire privately held AirDefense, one of the leading wireless LAN (WLAN) security providers. Motorola, Inc. © Datamonitor Page 12 Motorola, Inc. Key Employees KEY EMPLOYEES Name Job Title Board Greg Brown President and Chief Executive Officer Executive Board David W. Dorman Chairman Non Executive Board William R. Hambrecht Director Non Executive Board Thomas J Meredith Director Non Executive Board Judy C Lewent Director Non Executive Board Keith A. Meister Director Non Executive Board Nicholas Negroponte Director Non Executive Board Samuel C Scott Director Non Executive Board Ron Sommer Director Non Executive Board James R Stengel Director Non Executive Board Anthony J. Vinciquerra Director Non Executive Board Douglas A Warner Director Non Executive Board John A White Director Non Executive Board Miles D White Director Non Executive Board Daniel M. Moloney President, Home and Networks Mobility business Senior Management Executive Vice President Paul J. Liska Chief Financial Officer Executive Vice President Senior Management Gene Delaney President, Government and Public Safety Senior Management Enterprise Mobility Solutions business and Senior Vice President Greg A. Lee Senior Vice President Human Resources Kathy Paladino President, Enterprise Mobility Solutions business Senior Management and Senior Vice President A. Peter Lawson Executive Vice President, General Counsel and Senior Management Secretary Bob Perez Senior Vice President, Integrated Supply Chain Senior Management Motorola Patricia B. Morrison Executive Vice President, Chief Information Officer Senior Management Karen P. Tandy Senior Vice President, Public Affairs and Communications Senior Management Motorola, Inc. © Datamonitor Senior Management Page 13 Motorola, Inc. Key Employee Biographies KEY EMPLOYEE BIOGRAPHIES Greg Brown Board: Executive Board Job Title: President and Chief Executive Officer Since: 2008 Age: 47 Mr. Brown has been the President and Chief Executive Officer of Motorola since 2008. Prior to this role, he was President and Chief Operating Officer of Motorola. He has been an Executive Officer at Motorola since 2003 and most recently served as President of Motorola’s Networks and Enterprise business. Prior to joining Motorola in 2003, he was Chairman and Chief Executive Officer of Micromuse, a publicly traded network management software company. Before that, he was President of Ameritech Custom Business Services, a business that provided large business customers with custom communications and information technology. Mr. Brown also was President of Ameritech New Media. Before joining Ameritech in 1987, he held a variety of sales and marketing positions with AT&T for five years. An active member of the civic and business communities, he was appointed by the White House to serve on President Bush’s National Security Telecommunications Advisory Committee (NSTAC) in 2004. In addition, he is on the Board of Directors for World Business Chicago, the Chicago Council on Global Affairs, and the US-China Business Council. He also is a member of the Northwestern University Memorial Hospital Board. David W. Dorman Board: Non Executive Board Job Title: Chairman Since: 2008 Age: 53 Mr. Dorman has been the Chairman of Motorola since 2008. He is the Senior Advisor and Partner of Warburg Pincus, a global leader in equity. Prior to that, he was the Chairman and Chief Executive Officer at AT&T, a provider of internet and transaction based voice and data services, from November 2002 until his retirement in 2006. He began his career in the telecommunications industry at Sprint Corp. in 1981, and ultimately served as the President of Sprint Business Services. He serves on the boards of CVS Corporation, YUM! Brands, Firethorn Mobile, the Georgia Tech Foundation, and the Woodruff Arts Center in Atlanta. He was also a Director at Scientific Atlanta until its acquisition by Cisco Systems was completed in 2006. He received a BS degree in Industrial Management from the Georgia Institute of Technology. Motorola, Inc. © Datamonitor Page 14 Motorola, Inc. Key Employee Biographies William R. Hambrecht Board: Non Executive Board Job Title: Director Age: 72 Mr. Hambrecht is a Director at Motorola. He has been Founder, Chairman and Chief Executive Officer of WR Hambrecht + Co, a financial services firm, since December 1997. In 1968, Mr. Hambrecht co-founded Hambrecht & Quist, from which he resigned in December 1997 to form WR Hambrecht + Co. Mr. Hambrecht currently serves on the Board of Trustees for The American University of Beirut and is on the Advisory Investment Committee to the Board of Regents of the University of California. He also serves on the Advisory Council to The J. David Gladstone Institutes. In 2006, Mr. Hambrecht was inducted to the American Academy of Arts and Sciences. Mr. Hambrecht graduated from Princeton University. Thomas J Meredith Board: Non Executive Board Job Title: Director Since: 2005 Age: 57 Mr. Meredith has been a Director at Motorola since 2005. He is a co-founder and currently a General Partner of Meritage Capital, an investment management firm specializing in multi-manager hedge funds. He is also Chief Executive Officer of MFI Capital. Previously, he was the Managing Director at Dell Ventures and Senior Vice President, Business Development and Strategy at Dell from 2000 until 2001, and was Chief Financial Officer at Dell from 1992 until 2000. Mr. Meredith is a Director of Motive, Surgient and VoxPath Networks. Mr. Meredith is also an adjunct Professor at the McCombs School of Business at the University of Texas, and serves on the advisory boards of both the Wharton School at the University of Pennsylvania and the LBJ School at the University of Texas. Mr. Meredith received a B.S. degree in Political Science from St. Francis University, a J.D. degree from Duquesne University and an LL.M. degree in Taxation from Georgetown University. Judy C Lewent Board: Non Executive Board Job Title: Director Since: 1995 Age: 58 Ms. Lewent has been a Director at Motorola since 1995. She has been Chief Financial Officer at Merck & Co, a pharmaceutical company, since 1990, and in addition, Executive Vice President of Motorola, Inc. © Datamonitor Page 15 Motorola, Inc. Key Employee Biographies Merck since 2001. She had additional responsibilities as President, Human Health Asia from 2003 until 2005, when she assumed strategic planning responsibilities for Merck. She is also a Director at Dell. She serves as a Trustee of the Rockefeller Family Trust and is a life member of the Massachusetts Institute of Technology Corporation. She is a member of the American Academy of Arts & Sciences. She received a BS degree from Goucher College and an MS degree from the MIT Sloan School of Management. Keith A. Meister Board: Non Executive Board Job Title: Director Since: 2008 Age: 34 Mr. Meister has been a Director at Motorola since August 2008. Since 2003, he has served as Vice Chairman of the Board of Icahn Enterprises G.P, the General Partner of Icahn Enterprises, a diversified holding company engaged in a variety of businesses, including investment management, metals, real estate and home fashion. From August 2003 through March 2006, Mr. Meister also served as Chief Executive Officer of Icahn Enterprises G.P; and since March 2006, Mr. Meister has served as Principal Executive Officer of Icahn Enterprises G.P. Since November 2004, Mr. Meister has been a Managing Director of Icahn Capital, the entity through which Carl C. Icahn manages third-party private investment funds. Since 2002, Mr. Meister has served as Senior Investment Analyst of High River Limited Partnership, an entity primarily engaged in the business of holding and investing in securities. Mr. Meister also serves on the boards of directors of XO Holdings, WCI Communities, and Federal-Mogul Corporation. Mr. Icahn either controls or has an interest in each company mentioned above through the ownership of securities. Mr. Meister received an A.B. in government, cum laude, from Harvard College in 1995. Nicholas Negroponte Board: Non Executive Board Job Title: Director Since: 1996 Age: 64 Mr. Negroponte has been a Director at Motorola since 1996. He is the Founder and Chairman of the One Laptop Per Child non-profit organization created to design, manufacture and distribute laptops that are sufficiently inexpensive to provide every child in the world access to knowledge and modern forms of education. He is currently on leave from the Massachusetts Institute of Technology where he was Co-Founder and Chairman emeritus of the MIT Media Laboratory, an interdisciplinary, multi-million dollar research center focusing on the study and experimentation of future forms of human and machine communication. He founded MIT’s pioneering Architecture Machine Group, a combination lab and think tank responsible for many radically new approaches to the human-computer Motorola, Inc. © Datamonitor Page 16 Motorola, Inc. Key Employee Biographies interface. He joined the MIT faculty in 1966 and became a full professor in 1980. He received a BA and an MA in Architecture from the Massachusetts Institute of Technology. Samuel C Scott Board: Non Executive Board Job Title: Director Since: 1993 Age: 63 Mr. Scott has been Director at Motorola since 1993. He is the Chairman, President and Chief Executive Officer of Corn Products International, a corn refining business. He was the President of the Corn Refining Division of CPC International from 1995 through 1997, when CPC International spun off Corn Products International as a separate corporation. Mr. Scott serves on the Board of Directors of Bank of New York, Inroads/Chicago, Accion International and the Chicago Council on Global Affairs. He also serves as a Trustee of the Conference Board. He received a bachelor’s degree in engineering and an MBA from Fairleigh Dickinson University. Ron Sommer Board: Non Executive Board Job Title: Director Since: 2004 Age: 58 Mr. Sommer has been a Director at Motorola since 2004. He was the Chairman of the Board of Management of Deutsche Telekom from 1995 to 2002. He is a Director at Muenchener Rueckversicherung, Celanese, AFK Sistema, Tata Consultancy Services and Weather Industries. Mr. Sommer is also a Member of the International Advisory Board of The Blackstone Group. He received a PhD degree in Mathematics from the University of Vienna, Austria. James R Stengel Board: Non Executive Board Job Title: Director Since: 2005 Age: 52 Mr. Stengel has been a Director at Motorola since 2005. He is currently the Global Marketing Officer of Procter & Gamble Company. He joined Procter & Gamble in 1983, where he served as Vice President Global Baby Care Strategic Planning, Marketing and New Business Development from 2000 until 2001, when he became a Global Marketing Officer. He served as the Chairman of the Association of National Advertisers from 2004 through 2006. Mr. Stengel is also on the Seven Hills School Board of Trustees, the National Underground Freedom Center Board of Trustees and the Motorola, Inc. © Datamonitor Page 17 Motorola, Inc. Key Employee Biographies United Way Tocqueville Society. He received a BA degree from Franklin & Marshall College and an MBA from Pennsylvania State University. Anthony J. Vinciquerra Board: Non Executive Board Job Title: Director Since: 2007 Age: 53 Mr. Vinciquerra has been a Director at Motorola since 2007. He was named President and Chief Executive Officer of Fox Networks Group, a primary operating unit of News Corporation that includes the Fox Television Network, Fox Cable Networks, FOX Sports and Fox Networks Engineering & Operations, in June 2002. Mr. Vinciquerra also oversees Fox Sports Enterprises, which comprises Fox’s interests in professional sports franchises like the Colorado Rockies, stadiums and leading statistical information provider STATS. Mr. Vinciquerra joined Fox in December 2001 as President of the Fox Television Network. Prior to joining Fox, he was Executive Vice President and Chief Operating Officer of Hearst-Argyle Television, a position he had held since 1999. A past Chairman of the National Association of Television Program Executives, he is also a Director of the Boston-based Genesis Fund, the fund-raising organization of the National Birth Defects Institute, and a member of the Board of Trustees for Southern California Public Radio. Mr. Vinciquerra received a B.A. degree from the State University of New York. Douglas A Warner Board: Non Executive Board Job Title: Director Since: 2002 Age: 61 Mr. Warner has been a Director at Motorola since 2002. He was Chairman of the Board and Co Chairman of the Executive Committee at JP Morgan Chase & Company, an international commercial and investment banking firm, from 2000 until he retired in 2001. From 1995 to 2000, he was the Chairman of the Board, President and Chief Executive Officer at JP Morgan & Co. He is also a Director at Anheuser-Busch Companies and General Electric Company. He is on the Board of Counselors at the Bechtel Group and is a member of The Business Council. Mr. Warner is the Chairman of the Board of Managers and the Board of Overseers of Memorial Sloan−Kettering Cancer Center. He is a trustee of the Pierpont Morgan Library and a member of the Yale Investment Committee. He received a BA degree from Yale University. John A White Board: Non Executive Board Job Title: Director Motorola, Inc. © Datamonitor Page 18 Motorola, Inc. Key Employee Biographies Since: 1995 Age: 68 Mr. White has been a Director at Motorola since 1995. He is currently Chancellor of the University of Arkansas. He served as Dean of Engineering at Georgia Institute of Technology from 1991 to early 1997, having been a member of the faculty since 1975. Mr. White is also a Director at JB Hunt Transport Services and Logility. He received a BSIE from the University of Arkansas, an MSIE from Virginia Polytechnic Institute and State University and a PhD from the Ohio State University. Miles D White Board: Non Executive Board Job Title: Director Since: 2005 Age: 52 Mr. White has been a Director at Motorola since 2005. He has been the Chairman of the Board and Chief Executive Officer of Abbott Laboratories since 1999. He joined Abbott in 1984. He received a bachelor’s degree in mechanical engineering and an MBA degree from Stanford University. Mr. White is a Director at Tribune Company and is Chairman of the board of the Federal Reserve Bank of Chicago. He also serves on the Board of Trustees of The Culver Educational Foundation, The Field Museum in Chicago and Northwestern University. Daniel M. Moloney Board: Senior Management Job Title: President, Home and Networks Mobility business Executive Vice President Since: 2007 Mr. Moloney is Executive Vice President at Motorola, and President of the company's Home and Networks Mobility business. Prior to his current position, he was President of the company’s connected home solutions business, which develops technologies, applications and services that create rich information, communication, and entertainment experiences in and around the home. Mr. Moloney joined Motorola, then General Instrument Corporation, in 1983 as a member of the corporate financial and planning staff. He has served in various leadership positions for the company in marketing, product management, finance and strategy. He is also an honorary board member of Cable Positive. Mr. Moloney holds a master of business administration degree in management from the University of Chicago and a Bachelor of Science degree in electrical engineering from the University of Michigan. Paul J. Liska Board: Senior Management Motorola, Inc. © Datamonitor Page 19 Motorola, Inc. Key Employee Biographies Job Title: Chief Financial Officer Executive Vice President Since: 2008 Age: 52 Mr. Liska is the Chief Financial Officer and Executive Vice President at Motorola. Prior to joining Motorola, Mr. Liska served as an industrial partner for various private equity firms including MidOcean Partners, CVC Capital Holdings and Ripplewood Holdings. From 2004 to 2006, Mr. Liska served as Executive Chairman of US Freightways until its purchase by Yellow Roadway Corporation and in various capacities with Weekly Reader Companies, including Executive Chairman and Chief Executive Officer. From 2001 to 2004, Mr. Liska held several positions with Sears, Roebuck and Co., including President of credit and financial products and Executive Vice President and Chief Financial Officer. Prior to joining Sears, Mr. Liska was Executive Vice President and Chief Financial Officer of The St. Paul Companies from 1997 to 2001. Mr. Liska also previously served as President and Chief Executive Officer of Specialty Foods Corporation and in various financial roles at Kraft General Foods Corporation. He began his career as an accountant at Price Waterhouse and Co. Gene Delaney Board: Senior Management Job Title: President, Government and Public Safety Enterprise Mobility Solutions business and Senior Vice President Since: 2007 Mr. Delaney is President of the Government and Public Safety business. He joined Motorola in 1978 as a Financial Analyst in the Communications Sector. He has held leadership positions in finance, operations, general management, government relations and country management throughout his career. Mr. Delaney has extensive international experience having worked in Japan and led the international business for the Networks and Enterprise business. He holds a masters degree in finance from DePaul University and a Bachelor of Science degree in accounting from Southern Illinois University. Greg A. Lee Board: Senior Management Job Title: Senior Vice President Human Resources Since: 2008 Mr. Lee has been the Senior Vice President, Human Resources at Motorola since January 2008. In this role, Lee’s worldwide responsibilities include workforce development, organizational effectiveness, benefits and compensation, staffing, global inclusion, and diversity. Prior to joining Motorola in January 2008, he was the Senior Vice President, Human Resources at Coca-Cola Enterprises, the world's largest marketer, producer, and distributor of Coca-Cola products. Previously, he acted as an independent consultant providing advice and counsel on talent Motorola, Inc. © Datamonitor Page 20 Motorola, Inc. Key Employee Biographies management strategies. Earlier in his career, he served as Senior Vice President, Human Resources, for Sears, Roebuck and Company. Other leadership positions he has held include roles with Whirlpool Corporation, The St. Paul Companies, and PepsiCo. He began his career at Pullman. Kathy Paladino Board: Senior Management Job Title: President, Enterprise Mobility Solutions business and Senior Vice President Since: 2007 Ms. Paladino is President of Motorola’s Enterprise Mobility business. Joining Motorola (formerly Symbol Technologies) in 2004, she held sales leadership positions in the US and Americas International Theaters and most recently held the position of Senior Vice President of Worldwide Sales. Prior to joining Motorola, Ms. Paladino spent eight years with Cisco Systems leading Cisco’s U.S. Cable and Emerging Service Provider business. A 20-year technology industry veteran, she has held sales management positions at Dell Computer and Wang Laboratories. Ms. Paladino is on the Board of Directors for the AeA, a nationwide non-profit trade association that represents all segments of the technology industry. In the past, she has served on the board of directors of the Telecommunications Industry Association and was the 2003 Chair of the Women’s Action Network at Cisco. Ms. Paladino holds a BSFS Degree from Georgetown University. A. Peter Lawson Board: Senior Management Job Title: Executive Vice President, General Counsel and Secretary Since: 2005 Mr. Lawson has been Executive Vice President, General Counsel and Secretary at Motorola since 1998. Prior to assuming his current position, he was Senior Vice President, General Counsel and Secretary from 1996 to 1998; Senior Vice President and Assistant General Counsel from 1994 to 1996; Corporate Vice President and Assistant General Counsel from 1987 to1994; Vice President and General Attorney from 1985 to 1987; and Associate General Attorney from 1980 to 1984. Prior to joining Motorola in 1980, he was Senior Attorney for Baxter International, from 1978 to 1980. Earlier, he was an associate with Sullivan & Cromwell, New York, from 1972 to1978. Bob Perez Board: Senior Management Job Title: Senior Vice President, Integrated Supply Chain Motorola Since: 2008 Motorola, Inc. © Datamonitor Page 21 Motorola, Inc. Key Employee Biographies Mr. Perez has been the Senior Vice President of Motorola’s Integrated Supply Chain (ISC) organization, which encompasses the global operations associated with procurement, new product introduction, manufacturing, customer fulfillment and repair across the company’s three business units. Prior to being appointed to his current position, Mr.Perez was Senior Vice President of ISC’s global operations where he was responsible for ensuring that customers receive the products they order on time and with good quality. He was also the General Manager of the Mobile Devices supply chain organization where he was responsible for the manufacturing and distribution of 100 million mobile devices annually. Prior to joining the ISC organization, Mr. Perez served as Senior Vice President and General Manager for Motorola’s network infrastructure business. He was instrumental in starting up Motorola’s iDEN subscriber manufacturing operations. Prior to that, he managed design and development for portable two-way radios. Mr. Perez joined Motorola in 1979 as a Mechanical Engineer in Plantation, Florida. Patricia B. Morrison Board: Senior Management Job Title: Executive Vice President, Chief Information Officer Since: 2008 Ms. Morrison is the Executive Vice President and Chief Information Officer at Motorola. Before joining Motorola in 2005, she served as Executive Vice President and Chief Information Officer of Office Depot. Prior to Office Depot, she served as Chief Information Officer of The Quaker Oats Company in Chicago. As Chief Information Officer, Morrison oversaw the integration of Quaker's systems with PepsiCo following its acquisition by Pepsi in 2001. Prior to that, she was Chief Information Officer at GE Industrial Systems. Ms. Morrison began her career at Procter & Gamble, where she held a number of systems management and IT leadership positions. Karen P. Tandy Board: Senior Management Job Title: Senior Vice President, Public Affairs and Communications Since: 2008 Ms. Tandy has been the Senior Vice President of Public Affairs and Communications at Motorola since 2008. Prior to joining Motorola in 2007, she served as Administrator of the US Drug Enforcement Administration (DEA), where she managed a $2.4 billion budget and approximately 11,000 employees across the US and in 86 foreign offices. She also served on the Executive Committee of the International Association of Chiefs of Police. Prior to becoming DEA Administrator, she was Associate Deputy Attorney General, responsible for developing national drug enforcement policy and strategies. In this capacity, she also served as Motorola, Inc. © Datamonitor Page 22 Motorola, Inc. Key Employee Biographies Director of the Organized Crime Drug Enforcement Task Forces. Ms. Tandy previously held a variety of positions in the Criminal Division of the Department of Justice and served as an Assistant U.S. Attorney in the Eastern District of Virginia and in the Western District of Washington. Prior to joining the Justice Department, she served as a clerk for the Chief Judge of the Northern District of Texas. Motorola, Inc. © Datamonitor Page 23 Motorola, Inc. Major Products and Services MAJOR PRODUCTS AND SERVICES Motorola is provider of wireless handsets, wireless communications systems, and end-to-end broadband systems. The company's key products and services include the following: Consumer: Cell Phones Cell Phone Accessories Bluetooth Products Cordless Phones Two-way Radios Cable Modems and Gateways Digital Voice Modems Digital Cable Set-tops Digital Video Recorders (DVR) High Definition Receivers Timbuktu Pro Remote Control Software Enterprise: Smartphones Bar Code Scanners Wireless Broadband Networks Payment Terminals and Micro Kiosks Enterprise Wireless LAN RFID Wireline Broadband Solutions iDEN Mobile Devices Mobile Computers Two-Way Radios Enterprise Solutions Wireless Broadband Networks Enterprise Wireless LAN Mobile Software Platforms Government: Accessories Two-Way Radios Portable Radios Mobile Radios Biometrics Mobile Computers Public Sector Applications Two-Way Radio Infrastructure Dispatch Motorola, Inc. © Datamonitor Page 24 Motorola, Inc. Major Products and Services SCADA Systems MOTOBRIDGE Solution Wireless Broadband Networks ASTRO 25 Network Government Solutions Service provider: Cable Broadband Networks Cellular Networks iDEN Networks Wireless Broadband Networks Motorola, Inc. © Datamonitor Page 25 Motorola, Inc. Revenue Analysis REVENUE ANALYSIS Motorola The company recorded revenues of $36,622 million during the FY ended December 2007 (FY2007), a decrease of 14.5% over 2006. The decrease in net sales was due to a $9.4 billion decrease in net sales of the mobile devices segment. For the FY2007, the US, the company's largest geographic market, accounted for 50.6% of the total revenues. Motorola generates revenues through three business divisions: mobile devices (51.7% of the total revenues during FY2007), home and networks mobility division (27.3%), and enterprise mobility solutions (21%). Revenues by Division During the FY2007, the mobile devices division recorded revenues of $18,988 million, a decrease of 33.1% over 2006. The decrease in revenue was driven by a 27% decrease in unit shipments, a 9% decrease in average selling price, and decreased revenue from intellectual property and technology licensing. The home and networks mobility division recorded revenues of $10,014 million in FY2007, an increase of 9.3% over 2006. The increase in revenue was due to higher net sales in the home business, partially offset by lower net sales of wireless networks. The enterprise mobility solutions division recorded revenues of $7,729 million in FY2007, an increase of 43.1% over 2006. The increase in revenues was due to higher net sales in all regions and was driven by sales from the Symbol business acquired in January 2007, as well as higher net sales in the government and public safety market due to strong demand in North America. Revenues by Geography The US, Motorola's largest geographical market, accounted for 50.6% of the total revenues in the FY2007. Revenues from the US reached $18,548 million in 2007, a decrease of 1.2% over 2006. China accounted for 7.2% of the total revenues in the FY2007. Revenues from China reached $2,632 million in 2007, a decrease of 43.6% over 2006. The UK accounted for 2.9% of the total revenues in the FY2007. Revenues from the UK reached $1,070 million in 2007, a decrease of 18.1% over 2006. Israel accounted for 2% of the total revenues in the FY2007. Revenues from Israel reached $741 million in 2007, an increase of 12.4% over 2006. Motorola, Inc. © Datamonitor Page 26 Motorola, Inc. Revenue Analysis Germany accounted for 1.4% of the total revenues in the FY2007. Revenues from Germany reached $516 million in 2007, a decrease of 41% over 2006. Singapore accounted for 0.3% of the total revenues in the FY2007. Revenues from Singapore reached $128 million in 2007, a decrease of 27.3% over 2006. Other nations accounted for 35.5% of the total revenues in the FY2007. Revenues from other nations reached $12,987 million in 2007, a decrease of 20.8% over 2006. Motorola, Inc. © Datamonitor Page 27 Motorola, Inc. SWOT Analysis SWOT ANALYSIS Motorola builds and markets products, services, and applications that make simple and seamless connections, information, and entertainment possible through broadband, embedded systems and wireless networks.The company operates through three business divisions: mobile devices, network and enterprise, and connected home solutions. Motorola has strong technological capabilities. Motorola was one of the early advocates for WiMAX 802.16e as the technology has the bandwidth to deliver the multimedia experiences at a fraction of the cost of 3G technologies. Stiff competition across its operating segments could adversely affect the company's market share and profitability. Strengths Weaknesses Strong focus on WiMAX Strong brand Robust manufacturing capabilities Declining cell phone market share Weak profitability Customer concentration Opportunities Threats Separate mobile devices segment Strategic acquisition New contract wins Research in nanotechnology Intense competition Environmental, health and safety laws Credit ratings Strengths Strong focus on WiMAX Motorola was one of the early advocates of WiMAX 802.16e. The Wi-Max technology has the bandwidth to deliver the multimedia experiences at a fraction of the cost of 3G technologies. Motorola is continuing its investments in WiMAX, a next-generation wireless broadband technology based on the IEEE standard 802.16e. At the end of 2007, the business had won several commercial WiMAX contracts and participated in over 40 WiMAX trials globally. In June 2008, Motorola’s WiMAX WAP 25400 base station achieved the WiMAX Forum Certified seal of approval by passing required interoperability and conformance tests as outlined by the WiMAX Forum. Motorola is among the first companies to have its 2.5GHz WiMAX products certified by WiMax Forum. In 2007, the segment delivered WiMAX network equipment to Wateen Telecom in Pakistan and Sprint Nextel and Clearwire in the US. In 2007, the company deployed WiMAX in Pakistan, giving one million subscribers broadband services in a country where previously fewer than 100,000 broadband lines were available. Motorola, Inc. © Datamonitor Page 28 Motorola, Inc. SWOT Analysis The segment is also leveraging its WiMAX investment to develop its LTE (Long Term Evolution) solution. Vodafone and Verizon have launched a coordinated LTE trial in 2008. Motorola has been selected as a supplier to support this trial with both infrastructure equipment and handsets. Strong focus on WiMAX helps the company grow profitably in emerging technologies, including video and wireless broadband. Strong brand Motorola has a strong brand image. The company continues to strengthen its brand equity through various marketing campaigns. The company is ranked among the top 100 global brands by global Interbrand and Millward Brown surveys. Motorola is ranked 77 in the top 100 global brands in 2007, by Interbrand. The company is ranked at 92 in the BRANDZ top 100 Brand Rankings in 2008. To further enhance its brand image, the company’s is conducting marketing campaigns. In June 2008, Motorola was awarded both the Webby Award and the People’s Voice Award for Mobile Advertising in the Interactive Advertising category, at the 12th Annual Webby Awards held in New York. Motorola won the awards for a campaign at the new Sky Plaza at Hong Kong International Airport that integrated mobile advertising, out-of-home, TV spots, and Bluetooth technology. Strong brand image increases the acceptance of the company’s products. Robust manufacturing capabilities Motorola has robust manufacturing capabilities through a combination of own-facilities and contract manufacturers. The wireless handset segment of the company has manufacturing facilities in China, Singapore, and Brazil. The company’s other major facilities are located in Plantation, Florida; Singapore; Beijing and Tianjin, China; Jaguariuna, Brazil; and Basingstoke, England. The company has an interest in a joint venture in Hangzhou, China. It also uses several electronics manufacturing suppliers (EMS) and original design manufacturers (ODM) to lower costs and deliver products that meet consumer demands. In 2006, the company’s handsets were mostly manufactured in Asia. The networks and enterprise segment has design, integration, manufacturing, and distribution centers in Arlington Heights and Schaumburg, Illinois; Chandler and Tempe, Arizona; Fort Worth, Texas; Swindon, England; Arad, Israel; Hangzhou and Tianjin, China; Munich, Taunusstein and Berlin, Germany; and Penang, Malaysia. In addition, this segment utilizes EMS manufacturers, primarily in Asia. The connected home solutions segment has manufacturing facilities in Taipei, Taiwan and Nogales, Mexico. It also uses contract manufacturers in China for a portion of its cable modem/voice module production. Motorola’s global manufacturing network combined with its experience in working with EMSs and ODMs enable it to meet customer demand effectively, providing it with a competitive advantage. Weaknesses Motorola, Inc. © Datamonitor Page 29 Motorola, Inc. SWOT Analysis Declining cell phone market share Motorola’s worldwide market share has dropped to an estimated 14% in 2007, from 22% in 2006, according to industry sources. During the same time, Samsung had a steady increase in its market share, reaching an estimated 14.5% in the first quarter of 2007. Nokia has a global market share of approximately 38% of the global market volume of 1.14 billion mobile devices units sold in 2007. The company’s position in Western Europe is also weaker than that of its competitors Samsung and Nokia. The demand for Motorola’s wireless handsets slowed substantially in 2007. As a result, mobile devices net sales were down 33% compared to 2006 and the business incurred an operating loss of $1.2 billion. Unit shipments in 2007 were 159.1 million, a 27% decrease compared to unit shipments of 217.4 million in 2006. The decrease in unit shipments resulted from gaps in the segment’s product portfolio, including limited offerings of 3G products and products for the multimedia and mass market product segments, as well as an aging product portfolio. As a result, Motorola lost 8% of its market share and estimates its global market share to be approximately 14% for the full year 2007. In addition, Motorola’s market share in smartphone and WCDMA shipments remains very low at 1.4% and 1.8% in 2008. The company offers less than one-third of the 3G terminals offered by its competition, and has a limited presence in multiradio devices. Motorola has the weakest 3G portfolio, with only nine devices (accounting for only 5% of total 3G devices across all the vendors and 23% of Motorola’s total portfolio). In addition, Motorola’s current suite of 3G products does not offer the variety of functionalities that its peers have recently introduced. For example, none of the vendor’s 3G devices is WiFi enabled. Losing market share in the mobile phones segment could hamper the financial condition of the company as it was the highest contributor to the total revenues in 2007. Weak profitability The company’s profitability is following a declining trend in the recent years. The company’s operating profit declined from $4,605 million in 2005 to an operating loss of $553 million in 2007. The net profit of the company declined from $4,578 million in 2005 to a net loss of $49 million in 2007. As a result, the company reported a negative operating profit margin and a net profit margin of 1.5% and 0.1%, respectively, in 2007, down from 13.1% and 13%, respectively, in 2005. Continued decline in profitability would adversely impact the company’s financial performance. In 2007, the company incurred a net loss from continuing operations before income taxes of $390 million, compared to earnings from continuing operations before income taxes of $4.6 billion in 2006. The decrease in earnings (loss) from continuing operations before income taxes in 2007 compared to 2006 is primarily attributed to a $2.8 billion decrease in gross margin, driven by decreases in gross margin in the mobile devices and home and network mobility segments, partially offset by an increase in gross margin in the enterprise mobility solutions segment. It is also due to a $959 million increase in other charges (income), and $588 million increase in SG&A expenses. It was also impacted by a $323 million increase in R&D expenditures, a $235 million decrease in net interest income, and a $129 million decrease in income classified as other income. Motorola, Inc. © Datamonitor Page 30 Motorola, Inc. SWOT Analysis The decrease in gross margin in the mobile devices segment was due to a 9% decrease in ASP, decreased income from intellectual property and technology licensing, a 27% decrease in unit shipments, and a $277 million charge for a legal settlement with Freescale Semiconductor. The decrease in gross margin in the home and networks segment was due to continuing competitive pricing pressure in the market for GSM infrastructure equipment, and lower sales of iDEN infrastructure equipment, partially offset by increased sales of digital entertainment devices. In addition, the company has also witnessed a decline in cash from operating activities in the same preiod. The company’s cash from operating activities declined from $4,308 million in 2005 to $785 million in 2007. Decrease in cash and cash equivalents may negatively impact the company’s investing activities. Weak profitability would affect the investors’ confidence in the company. Customer concentration The company derives a significant portion of its total revenues from a few customers in all its business segments. The mobile devices segment has several large customers worldwide. The largest of the segment’s end customers (including sales through distributors) are Sprint Nextel, AT&T, Verizon, China Mobile and America Movil. In 2007, aggregate net sales to these five customers represented approximately 42% of the segment’s net sales. In addition to selling directly to carriers and operators, Motorola’s mobile devices business also sells products through a variety of third-party distributors and retailers, which account for approximately 33% of the segment’s net sales. The largest of these distributors is Brightstar Corporation. The largest customers of the home and networks mobility segment are Comcast, Verizon, KDDI (a service provider in Japan), China Mobile and Sprint Nextel. In 2007, aggregate net sales to these five customers represented approximately 43% of the segment’s net sales. The largest of the enterprise mobility solutions segment’s customers are the US Government, Scansource, IBM, Ingram Micro and Wal-Mart. In 2007, aggregate net sales to these five customers represented approximately 19% of the segment’s net sales. With such concentration of customers in all its segments, the loss of any of the segment’s largest customers may have an adverse effect on the segment’s business. Opportunities Separate mobile devices segment Motorola started exploring the structural and strategic realignment of its businesses in January 2008 to better equip its mobile devices business to recapture global market leadership and to enhance shareholder value. Later, in March 2008, the company’s Board of Directors commenced a process to create two independent, publicly-traded companies.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 Motorola, Inc. © Datamonitor Page 31 Motorola, Inc. SWOT Analysis shareholders holding shares of two independent and publicly-traded companies: the mobile devices business, and the broadband and mobility solutions business. The company expects that the separation of its businesses would take place in 2009. This move is expected to provide improved flexibility; more tailored capital structures; and increased management focus on each business. Strategic acquisition The company completed five significant acquisitions to expand its core portfolio in 2007. In February 2007, Motorola acquired Netopia, a broadband equipment provider for DSL customers, which allows for phone, TV and fast Internet connections. The acquisition enables Motorola to address the global broadband DSL opportunity. The company acquired Tut Systems, one of the leading developers of edge routing and video encoders in March 2007. The integration of Tut Systems' solutions with Motorola's digital video delivery solutions will expand Motorola's ability to help service providers deploy advanced video services over IP, ATM, or RF-based network architectures. In May 2007, the company acquired Modulus Video, a provider of MPEG-4 Advanced Coding compression systems designed for delivery of high-value video content in IP set-top devices for the digital video, broadcast and satellite marketplaces. This acquisition complements Motorola’s acquisitions of Tut Systems and Netopia in the creation and delivery of an integrated, video delivery system for multiple network architectures. In July 2007, Motorola acquired Terayon Communication Systems, a provider of real-time digital video networking applications to cable, satellite and telecommunication service providers worldwide. The acquisition of Terayon and its software-driven application solutions enhances Motorola’s video infrastructure and mobility core by providing it with video processing solutions that enable digital ad insertion, motion and graphical overlays, channel branding and channel line-up solutions as well as ad insertion delivery technologies. In the following month, Motorola acquired Leapstone Systems, a provider of intelligent multimedia service delivery and content management solutions to networks operators. Leapstone would contribute its intelligent service delivery and content management platform to Motorola, which serves as a new engine for enabling seamless mobility experiences across applications, devices and domains. With these acquisitions, Motorola can improve its position globally by enhancing its capabilities in video solutions. New contract wins Motorola signed multiple contracts worth $431 million with China Mobile Communications Corporation (CMCC) for its GSM network upgrades and expansion in the first half of 2008. Following the $394 million contracts over the same period of last year, these multiple contracts strengthen Motorola’s presence in China. The cooperation will enable China Mobile to expand its network coverage and manage its GSM network even more effectively. Under these agreements, Motorola will supply CMCC with GSM network equipment and a range of services. The expanded GSM networks will then be deployed across 16 provinces and municipalities within the coverage area of CMCC, namely Beijing, Tianjin, Sichuan, Zhejiang, Henan, Hunan, Guangdong, Yunnan, Fujian, Hubei, Shanxi, Jilin, Liaoning, Jiangxi, Anhui and Guizhou. Motorola, Inc. © Datamonitor Page 32 Motorola, Inc. SWOT Analysis Motorola has won a number of significant GSM network expansion contracts over the past few years. Some of the recent major contract wins include expansion contracts with VNPT Group in Viet Nam, Mobily in Saudi Arabia, and Celtel Nigeria in Nigeria. Motorola also won a turnkey contract in March 2008 to deploy and manage GSM network for Zain in Saudi Arabia. As the Chinese telecom industry is going through industry-wide restructuring, China’s telecom operators are undergoing one of the most critical changes in history. New contract wins in China, the Middle East and Africa would generate incremental revenues for the company. Research in nanotechnology Nanotechnology is expected to have a noticeable impact, especially on the communications industry, within the next few years. According to industry reports, products incorporating nanotechnology might contribute up to $1 trillion to the US economy by 2015. Motorola’s “Nanotechnology for Communications” research includes nanomaterials, nanoelectronics, nanoenergy, nanostructures, nanomanufacturing and physical and functional characterization. The company’s focus is on those areas which help core businesses by improving energy management, improving the displays and surface durability of products. In 2004, the company commercialized the i870 phone with a protective coating using antimicrobial silver zeolite nanoparticles from AgION. In the following year, Motorola introduced its nanoemissive display (NED) prototype, which represented a 5-inch section of a large, flat panel display. From energy storage solutions to improved displays and surfaces, nanotechnology will impact the communications industry in the next few years. It also won the Nano 50 Award in, Nano Emissive Display technology in 2006. The company with its ongoing research in nanotechnology is well positioned to capture the opportunities in this field. Threats Intense competition Motorola faces intense competition from various large players in its key segments and markets. The company's principal competitors in mobile devices include Nokia, LG, Samsung, Siemens and Sony Ericsson. The company’s largest competitor in the digital entertainment devices market for broadband networks in North America is Cisco. Other competitors in North America include ARRIS, Ericsson (which entered the market in 2007 via the acquisition of Tandberg) and Harmonic. Most of the company’s competitors are large organizations with strong development capabilities and balance sheets. In the wireless networks market Ericsson is the market leader, followed by the Nokia-Siemens joint venture, Alcatel-Lucent, and two vendors with similar market share, Motorola and Nortel. Huawei, Samsung, NEC and ZTE are also significant competitors. In the government and public safety market major competitors include M/A-Com, EADS Telecommunications, Kenwood, Motorola, Inc. © Datamonitor Page 33 Motorola, Inc. SWOT Analysis EF Johnson, Cisco and large system integrators. Stiff competition across its operating segments could adversely affect the company's market share and profitability. Environmental, health and safety laws The company’s operations and the products are subject to a wide range of global environmental, health, and safety laws. Some of these laws relate to the use, disposal, clean up, and exposure to hazardous substances. In the US, laws often require parties to fund remedial studies or action regardless of fault. Motorola continues to incur disposal cost and has ongoing remediation obligations. Changes to US environmental laws or discovery of additional obligations under these laws could have a negative impact on Motorola. Over the last several years, environmental laws have been focusing on the energy efficiency of electronic products and accessories, electronic products and packaging, recycling, and reducing or eliminating certain hazardous substances in electronic products. These laws impact the company’s products and make it more expensive to manufacture and sell the product. It may also be difficult to comply with the laws promptly and the company may not have compliant products available in the quantities requested by customers, impacting sales and profitability. For example, electronic products sold into Europe were required to meet stringent chemical restrictions by July 1, 2006 under the EU RoHS Directive. China is adopting similar requirements, the first of which requires labeling and chemical content disclosure for all electronic products brought into or sold within China after February 28, 2007. It is expected that these trends would continue. In addition, the company is anticipating increased consumer demand for the voluntary reduction or elimination of certain hazardous constituents from wireless handsets. Compliance with existing or future environmental, health, and safety laws could subject the company to future costs and liabilities. It may impact production capabilities, limit the company’s ability to sell, expand or acquire facilities and impact its financial performance. Credit ratings Three independent credit rating agencies, Fitch Investors Service (Fitch), Moody’s Investor Services (Moody’s), and Standard & Poor’s (S&P), assign ratings to the company’s short-term and long-term debt. In February 2008, Fitch placed all debt on rating watch negative. In January 2008, Moody’s placed long-term debt on review for possible downgrade. S&P downgraded long-term debt to BBB (credit watch negative) from A- (negative outlook); placed A-2 commercial paper on credit watch negative) in January 2008. Motorola’s debt ratings are considered “investment grade.” In case the company’s credit ratings were to decline two levels from the current Fitch and S&P ratings, the company’s long-term debt would no longer be considered investment grade and financial flexibility would be reduced and cost of borrowing would increase. Motorola, Inc. © Datamonitor Page 34 Motorola, Inc. Top Competitors TOP COMPETITORS The following companies are the major competitors of Motorola, Inc. Alcatel Cisco Systems, Inc. NEC America, Inc. Nokia Corporation Siemens AG LM Ericsson Telephone Company ARRIS Group, Inc C-COR Incorporated Sony Ericsson Mobile Communications AB Samsung Corporation Huawei Technologies Co. Ltd. Nortel Networks Corporation ZTE Corp. Motorola, Inc. © Datamonitor Page 35 Motorola, Inc. Company View COMPANY VIEW A statement by Greg Brown, President and Chief Executive Officer of Motorola is given below. The statement has been taken from the company’s 2007 annual report. ---------------------------------------------------------------------------------------------------------------------Motorola has a strong global brand, talented people and a proven record of creating disruptive technologies and innovative products that advance the way the world connects. We help meet the needs of consumers, businesses and governments around the world. As we enter Motorola’s 80th year, my goal as the new CEO is to build on our strong foundation, to renew and strengthen the company and to create increased value for our shareholders. To achieve this, we are committed to growing the value of our businesses, being our customers’ most valued partner, and creating a winning culture focused on execution. Looking ahead, we will continue to implement our strategic plans and pursue opportunities for increased profitability across all of our businesses while never losing sight of our customers, quality and innovation. 2007 Overview During 2007, our Mobile Devices business faced significant challenges. We recognize these challenges and have worked hard to accelerate the business’ recovery. We are committed to improving our operational and financial performance in Mobile Devices and have already taken steps in that direction. While our product portfolio enhancement efforts are underway, they will take more time to complete. During this transition, we will maintain a significant focus on cost, cash and driving profitability improvement. As for Home and Networks Mobility and Enterprise Mobility Solutions, each of these businesses delivered solid results, finished with strong momentum and maintained category leadership positions in growing markets. In Home & Networks Mobility, we are focused on both delivering personalized media experiences to consumers at home and on-the-go and enabling service providers to operate their networks more efficiently and profitably. Our investments in the home enable us to continue capitalizing on strong underlying demand for high-definition and video-on-demand services, as well as the convergence of services and applications across delivery platforms. Our Enterprise Mobility Solutions business delivers exciting new technologies to an expanding mobile workforce and provides an innovative product offering to government and public safety customers. In 2007, we successfully completed the integration of Symbol Technologies, which has enabled us to help our enterprise customers reduce costs, increase worker productivity and enhance their Motorola, Inc. © Datamonitor Page 36 Motorola, Inc. Company View mobility experience. Our mission-critical communications solutions continue to address top-priority homeland security and public safety concerns for customers around the world. Additionally, we remain focused on our environmental footprint and supporting our communities as a responsible corporate citizen. We also encourage employees to volunteer in the community and conducted our second annual global day of service, during which over 11,000 employees gave their time, talent and energy to 300 non-profit organizations in 47 countries. 2008 Outlook On March 26, 2008, we announced the commencement of a process to create two independent, publicly traded companies: one comprised of our Mobile Devices business and the other, Broadband & Mobility Solutions, which includes Motorola’s Enterprise Mobility, Government and Public Safety, and Home and Networks businesses. Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus — as well as more targeted investment opportunities for you, our stockholders. Our management team and Board of Directors, together with independent advisors, have been reviewing opportunities to enhance stockholder value for quite a while. This decision followed our January 31, 2008 announcement to evaluate the structural and strategic realignment of our businesses. Based on current plans, the creation of the two stand-alone businesses is expected to take the form of a tax-free distribution to Motorola’s shareholders, subject to further financial, tax and legal analysis, resulting in shareholders holding shares of two independent and publicly traded companies. We expect that this separation, if consummated, would take place in 2009. I am confident that through the innovation of our people, combined with dedication to our customers and shareholders, we can provide a path for growth and improved profitability and position Motorola for future success. ---------------------------------------------------------------------------------------------------------------------- Motorola, Inc. © Datamonitor Page 37 Motorola, Inc. Locations and Subsidiaries LOCATIONS AND SUBSIDIARIES Head Office Motorola, Inc. 1303 East Algonquin Road Schaumburg Illinois 60196 USA P:1 847 576 5000 F:1 847 576 5372 http://www.mot.com Other Locations and Subsidiaries Motorola Australia 10 Wesley Court Tally Ho Business Park Burwood East Victoria 3151 AUS Motorola Argentina SA Avenida del Libertador 1855 B1638bge Vicente Lopez Buenos Aires ARG Motorola No. 108 Jian Guo Road Chao Yang District Beijing CHN Motorola Redwood, Crockford Lane Chineham Business Park Basingstoke Hampshire RG24 8WQ GBR Motorola Heinrich-Hertz-Straße 1 D-65232 Taunusstein DEU Motorola India Motorola Excellence Centre 415/2 Mehrauli-Gurgaon Road Sector 14, Gurgaon 122 001 Haryana IND Motorola Switzerland Ruetistrasse 28 4th Floor 8952 Schlieren CHE Motorola Russia Ducat II 7 Gasheka Street Building 1 Moscow 123056 RUS Motorola, Inc. © Datamonitor Page 38 Motorola, Inc. Locations and Subsidiaries Motorola Italy Via Cardinal Massaia, 83 Torino 10147 ITA Motorola, Inc. © Datamonitor Motorola Japan 3-20-1, Minami-Azabu Minato-ku Tokyo Japan 106-8573 JPN Page 39