Nortel and Motorola to Form J-V?

Two giants of the mobile equipment world, Motorola and Nortel Networks are said to be locked in talks to combine their wireless infrastructure divisions into a single joint venture. According to reports in the Wall Street Journal, the two North American companies are keen on the move which would increase their competitive position against the bigger players that dominate the market for mobile network kit, such as Ericsson, Alcatel-Lucent and Nokia Siemens Networks.

If consummated, the talks will create a new company with annual sales of about US$10 billion. A previous suggestion that the protagonists should each take a 40% share in the new business with a private equity company buying the remaining shares was knocked on the head after no suitable buyer seemed likely to emerge.

Motorola's network infrastructure division accounts for just over 15% of the company's annual sales of US$36 billion, claims the Wall Street Journal. The paper goes on to say that analysts have repeatedly suggested that the Illinois-based company should shed its network making unit as it is finding growth in this area hard to come by. However, the top brass at Motorola have so far shown a reluctance to jettison it and maintain that it remains profitable.

The wireless equipment division of Nortel is said to represent about one third of the company's US$7.5 billion in sales during the first nine months of 2007.