MSI’s enterprise business unit opens the door to broader client base and diversified offerings
Yesterday, Zebra Technologies announced the purchase of Motorola Solutions’ Enterprise business for $3.45 billion. The acquisition will provide Zebra with the opportunity to access new technology markets in addition to extending its geographical reach and serving 95% of Fortune 500 companies worldwide. More importantly, however, the purchase will broaden Zebra’s product and service portfolio to encompass nearly all areas of data capture and asset tracking, from barcode printing to scanning solutions, mobile computing, and software.
Currently, Zebra is the leading barcode printer vendor with a considerable margin over the competition in global market share for a market that is over $1 billion in size. However, as we mentioned in VDC’s Auto ID and Data Capture blog in February, the company has experienced a flattening of revenues in its core businesses and has been looking to innovate and expand their global presence through new avenues and acquisitions.
A bold but risky move
Although the deal makes sense from a strategic point of view, the financial side underscores the magnitude of the deal; of the $3.45 billion, only $200 million comes from Zebra’s cash on hand, with the rest coming from new debt, as the firm currently carries none. Motorola Solutions’ earnings for its enterprise business far outstrip those of Zebra, with earnings of $2.5 billion versus $1 billion for Zebra.
VDC considers this to be a very interesting move by Zebra Technologies, particularly as the company is taking on an entity that is much bigger than itself. While we fully expect integration to be a long, drawn-out process, with an additional base of 4,500 employees worldwide and entry into several brand-new data capture technology markets, each with their unique nuances, this deal gives them access to a strong customer base, especially in the Retail vertical — an area of growing focus for Zebra. At the same time, however, VDC remains skeptical about Zebra’s ability to turn around Motorola Solutions’ struggling enterprise business sales given the onslaught of consumer devices and growing threat to incumbents from low-cost competitors.
VDC will be taking an in-depth look at the ramifications of the acquisition in a report next week by Richa Gupta, VDC’s Senior Analyst in the AutoID and Data Capture practice, and EVP David Krebs.
(with contribution from Richa Gupta)
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