Compal Seen to Get Huge Boost from Deal with Motorola

Taipei, Jan. 14, 2010 (CENS)--Compal Broadband Networks is estimated to enjoy an annual revenue increase of NT$6.3 billion (US$196 million at US$1:NT$32) and eventually pose threat to Hon Hai Group's sales in North America after acquiring Motorola EMEA EuroDocsis consumer premise equipment business.

Motorola recently sold its Europe, the Middle East and Africa (MEMA) EuroDocsis consumer premise equipment business to the Taiwanese manufacturer for around US$300 million.

The deal will allow Compal, a broadband consumer-end equipment venture of the Compal Group, to take over Motorola's European customers, including telecom carrier Telefonica De Espana, thereby helping push up its revenue at an annual rate of NT$6.3 billion, up from NT$4-5 billion (US$125-156 million) recorded when it was still a contract supplier of set-top boxes and cable modems to Motorola.

According to industry watchers, the Motorola consumer premise equipment business has annual turnover of around US$200 million, underscoring the decent cost in favor of Compal in the acquisition deal.

In the past, Motorola, currently the world's No.2 supplier of set-top boxes and cable modems, depended on Compal Broadband for the digital-signal receivers installed on Europe's TVs. Its contract supplier of the consumer-end devices used in North America is the Hon Hai Group.

Industry executives feel that in the long run Compal may pose a threat to Hon Hai in North American market due to increasingly close ties between Compal and Motorola.

Compal said it would market its products in Europe under Motorola's brand names in the initial stage after the acquisition. Compal Group's Aracdyan Technology Corp. will be designated to make the products for Compal. Aracdyan had revenue totaling NT$11.4 billion (US$358 million) in 2009.

Industry executives pointed out that acquiring the Motorola's asset shows Compal's upbeat view about the global market outlook for broadband home connectivity. The acquisition makes Compal first Taiwanese manufacturer of network-communications equipment to acquire a customer's asset.