Friday, June 02, 2006

Motorola Grabs TTP for $192M

The RED HERRING reports that Motorola (MOT) "will pay $192 million for TTP Communications, which makes 3G software and chip technology. Motorola will pay 45 pence ($0.84) per share for the British company—more than three times TTP’s closing price on Wednesday of 13 pence."

According to the article, "Cambridge, U.K.-based TTP Communications, formed in 1988, currently has 575 employees, and holds intellectual property for valuable third-generation, or 3G, cellular technology. The company licenses technology both for chips and customized cell phones. Motorola has been using TTP’s “AJAR technology” to customize software for its low-end phones, and buying the company could have been cheaper than continuing to pay licensing fees."

John Jackson at Yankee Group thought that "Motorola is likely most interested in TTP’s chip designs for 3G phones. And that could mean bad news for chip technology company Freescale, which sells 3G chip technology to Motorola."

Jackson said, "It’s a good day for TTP. But Motorola’s decision to acquire TTP puts Freescale in a tenuous spot. Getting this 3G chip technology right is really difficult. There is a land grab going on for 3G technology. It could be really disruptive for Freescale."

Jackson added that "Motorola did not buy TTP for their operations, which are cash-flow negative," leaving "TTP’s silicon designs," that Jackson predicted Motorola "found to be very valuable."