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Rumor: Ericsson Looking To Buy Motorola

This is very much a “rumors are rife” story, so take it as such: Ed Snyder at Charter Equity Research has allegedly claimed that two of the main shareholders in Motorola told him that Carl Icahn has spread rumours that Ericsson is looking to buy Motorola, reports Mobile Mentalism, via the Mobile Weblog.

The reasoning: “Creating mobile phones with great features and that must constantly change to keep pace with the market is hugely expensive. Creating network infrastructure to support these phones (i.e. the bits of kit the mobile operators buy) is also extremely expensive and competitive…Motorola does both…If Ericsson took over Motorola, though, it could restructure the company so that Ericsson-Motorola focused on the network kit, while a spin-off Motorola handset company (MOTOMOBILE?) focused exclusively on handset design.”

I have my doubts over whether Ericsson would get anything out of this. I can’t speak to the network kit, but major mobile handset manufacturers have few things going for them — brand, a clever design team and possibly some relationships. Motorola has a pretty good brand, but if Ericsson wanted to merge Motorola with Sony Ericsson there’s a very big brand conflict…and having two different mobile handset manufacturers would be a little odd. Sony Ericsson’s design team is currently running rings around Motorola’s (or more accurately, it was 6-12 months ago when the phones currently on the market were being developed) so it won’t get much out of that. It could get some distribution relationships, but why buy a company just to cannabalize its sales to a smaller competitor? I think Ericsson would get more bang for its buck by aiming for organic growth by Sony Ericsson, and investing any extra funds in its various other technology initiatives. Of course, I could be wrong…companies have made seemingly silly deals before, and sometimes they work out very well.

Update: Here’s something relevant in AP: “We’re not entering into a major acquisition period,” said Ericsson Chief Executive Carl-Henric Svanberg. “We have a lot of the acquisitions behind us.”