It was surprising to see in the The Wall Street Journal Monday morning that Motorola Inc. and Nortel Networks Corp. are reportedly contemplating a joint venture to combine their wireless infrastructure units. While the companies hope the venture will bolster their businesses as the telecom equipment industry contracts, undertaking a joint venture of this magnitude at this moment in time is not only ambitious, it's loaded with risk.
As any seasoned dealmaker knows, joint ventures are never easy (check out this
Corporate Dealmaker report on Dow Chemical Co.'s approach to JVs) and the results delivered rarely match the expectations. This is true even for companies pursuing ventures from positions of strength. Far from the best of times, Motorola is contemplating a major restructuring and facing the prospect of new Carl Icahn-backed
board members, while Nortel has spent the past couple of years downsizing its business. While both companies have experienced deal teams that certainly understand the headaches and challenges of JVs, it's true too that the changes underway at both companies could distract from the time, energy and resources needed to implement and maintain any joint venture.
- Suzanne Stevens
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