Motorola is selling its life sciences unit but has not yet found a buyer, according to a report earlier this week in Crain’s Chicago Business.
The report said the Chicago-based communications giant put its life sciences unit on the block earlier this year as part of its strategy to streamline its financially troubled operations. The company lost $5.8 billion on $29.9 billion in revenues last year, compared to $895 million in profits in 2000, according to documents filed with the US Securities and Exchange Commission.
Motorola life sciences representatives refused to confirm the story, saying they would not comment on “rumor or speculation.”
Indeed, rumors have been buzzing around Wall Street for some time that Motorola was exiting the microarray business, and even made their way into Affymetrix’s fourth quarter conference call several months ago. Until recently, the rumors have been vigorously denied by Motorola representatives, and the company has continued to advertise its CodeLink arrays in major scientific publications.
But for analysts who cover Motorola, the news is no surprise: The company has been in the process of “making the tough decisions of deciding which businesses it might exit from,” said John Bucher, an analyst at Gerard Klauer Mattison’s Los Angeles office.
“They need to raise cash and anything that’s not strategic would be on the auction block,” said Vivian Mamelak, who covers Motorola for Arnhold & S. Bleichroeder. “They haven’t been able to leverage that business, and it doesn’t really go with the other things they do.”
Former employees had similar reactions, at least when it came to the high-density CodeLink microarray business. “I always thought that it was hard to tie [the biochip business to the core businesses and core strengths” of Motorola, said Randy Levine, former vice president of business development for Motorola Life Sciences’ eSensors unit. But while Levine — who left the company in January to serve as CEO of Denver microelectronics startup Zettacor — said he knew the biochip end of the business had been on the block for months, he said he had not been aware of any plans to sell the eSensors side of the business, which the company bought for $280 million in 2000.
The Crain’s Chicago story indicated that the entire life sciences unit was up for sale.
Indeed, Motorola might have a hard time selling the CodeLink business without throwing in the eSensors as well. While the 10,000-spot oligonucleotide CodeLink arrays have enjoyed positive feedback from early users, Motorola has yet to bite into the dominant market share of high-density leader Affymetrix. To be successful at this, the company would have to keep investing in aggressive marketing campaigns, and find a way to undercut Affymetrix pricewise. This task is rendered even more difficult by the fact that Affymetrix just cut its price-per-datapoint in half with its new U133 array, which squeezes the whole genome (or at least 45,000 unique transcripts) onto two arrays.
While Motorola’s glass slide arrays can work with any scanner and software, Affymetrix’s existing base of over 640 installed systems, which can only handle Affymetrix chips, helps keep competitors like Motorola out of the lab.
But Motorola’s eSensor diagnostic system, which consists of microfluidic chips with electronic probes for 36 different SNPs, has a wide open playing field. The closest competitor is Nanogen, which has chosen to narrow its focus to the clinical diagnostics market. Motorola, by contrast, has also been targeting researchers who want to correlate genetic polymorphisms and disease. The system includes a 48-chip version, and a 12-chip version, each of which fits onto a benchtop. In each, microfluidics chips on the end of plastic popsicle stick handles slide into slots along the top. A computer program monitors the entire process, and tells the user when the samples are placed in the system correctly. The system is designed to be easy to use and is priced at $5,000 and $25,000. While the initial system involves sample prep stages, Motorola was aiming to develop a version that could use whole blood samples.
Eventually, the company foresaw integrating its polymorphism detection chips into handheld diagnostic devices, and company brass saw this new device as a “third leg” for the company, along with electronics and cell phones.
But the present belt-tightening era has suffocated many a visionary concept before it has a chance to fully mature, and the Motorola efforts appear headed that way. Unless, of course, Motorola finds a visionary buyer for these divisions in the near future. — MMJ