Subject: [NEXTEL-1] Motorola, Nextel growing apart-/ Timmy Changes His Name-- "Nextel CEO Thomas Donahue"

From: [email-masked]
Date: Sun, 28 Sep 2003 12:20:53 -0400

September 28, 2003
Motorola, Nextel growing apart
By Julie Johnsson

As Motorola Inc. parts ways with the founding Galvin family, another of the
company’s long-term relationships is showing signs of strain. Tensions are rising
between the Schaumburg-based wireless telecommunications equipment manufacturer
and its largest domestic customer.

In recent months, Motorola has angered Nextel Communications Inc. by helping the
Virginia-based wireless carrier’s rivals beef up their services and opposing a key
growth initiative for Nextel.
continued below

Motorola helped launch Nextel in the mid-1990s, and for most of the past decade,
their fortunes have been linked. Motorola supplied Nextel with a popular
walkie-talkie feature that other cellular telephone carriers lacked, and Nextel
gave Motorola a reliable stream of orders for handsets and network equipment based
on a proprietary technology owned by Motorola.
Nextel CEO Thomas Donahue has often described the relationship as a “marriage.”
But the two have grown apart as Motorola expanded its business with other carriers
by offering them a version of the “push-to-talk” technology that has been Nextel’s
main competitive advantage. These days, the longtime partners often meet as
courtroom adversaries.

Nextel has sued Motorola in a dispute initiated by Verizon Wireless Inc., which
recently rolled out a competing push-to-talk service using Motorola equipment. And
Motorola is urging the Federal Communications Commission to reject Nextel’s bid to
obtain additional radio spectrum for its services.

While the companies may eventually face a wrenching decision about the future of
their relationship, for now they’re keeping up an amicable front.

“Adults will disagree,” says Thomas Kelly, Nextel’s executive vice-president and
chief operating officer, of the recent spats. “Motorola is an extremely good
supplier. But they have done a few things I wish they’d never done.”

Asked if the relationship is strained, a Motorola spokes-woman accentuates the
positive: “Motorola has great confidence in the ongoing success of Nextel, a
company with which we have had a long and mutually beneficial relationship.”

Motorola can ill afford to let the business partnership degenerate further. Nextel
contributed nearly $2.5 billion, or 9%, of Motorola’s $26.7 billion in total
revenues for 2002. Although it sold 25 million Nextel shares this spring, Motorola
still holds 47.5 million shares, giving it a 4.75% stake worth $940 million.

http://chicagobusiness.com/cgi-bin/news.pl?id=10201

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