Huawei, Moto settle, paving the way for NSN buyout this month

Huawei’s trade secrets are secrets no more. The Chinese vendor has settled its ongoing dispute with Motorola Solutions (NYSE:MSI) over intellectual property Moto had access to from a decade-old infrastructure partnership (CP: Huawei suit creates problems for NSN-Motorola deal). The settlement clears the way for Nokia Siemens Networks’ (NYSE:NOK, NYSE:SI) renegotiated acquisition of most of Motorola Solutions commercial wireless network portfolio at the end of the month—a deal it had hoped to close in 2010 (CP: NSN’s Moto Networks buy looks beyond CDMA, WiMAX).

NSN will have to pay a price though. According to the joint statement from the two litigants, Motorola and NSN will have to pay an unspecified fee for Huawei and Moto’s jointly owned commercial agreements, after which NSN and Moto will be free to use Huawei intellectual property when servicing those networks with Huawei-built components (Briefing Room: Motorola Solutions and Huawei issue joint statement). NSN and Motorola have come to a new purchase price of $975 million, more than $200 million less than the original deal, and have set a new closing data target of April 29 (Briefing Room: NSN, Motorola Solutions agree to new purchase price).

NSN didn’t offer any further comment, but Moto and Huawei issued a few carefully worded statements attributed to their executives—painting a picture of two fighting friends making up and shaking hands:

- Motorola CEO Greg Brown: “We regret that these disputes have occurred between our two companies. Motorola Solutions values the long-standing relationship we have had with Huawei. After reviewing the facts, we decided to resolve these matters and return to our traditional relationship of confidence and trust. I am pleased that we can again focus on having a cooperative and productive relationship.”

- Huawei Vice Chairman of the Board and Executive Vice President Guo Ping: “Throughout our decade long relationship with Motorola Solutions, Huawei has contributed cutting edge technology to Motorola Solutions for use around the globe. Huawei provided Motorola’s experts and counsel with source code and millions of documents. Huawei acted properly and above board at all times and developed its products independently and without the use of any Motorola trade secrets. With the resolution of these cases, and the misunderstandings put to rest, Huawei is pleased to move forward with its efforts to provide innovative solutions to its customers.”

Considering the old deal was for Huawei GSM and UMTS gear that Moto sold under its own brand, the size of the settlement could be quite high. Though the partnership extends back to 2000, it really got into high gear in 2006 when Motorola effectively discontinued its UMTS and high-speed packet access (HSPA) product lines and started reselling Huawei 3G infrastructure. The target of the venture was Motorola’s 66 GSM customers globally, all of whom would have been in the market for a 3G network. According to the joint statement, Motorola bought $880 million in Huawei radio access and packet core gear over the ten-year span of the agreement.

Baring no further problems, NSN and Moto will look to close this deal as quickly as possible. With the handset and consumer businesses spun off into a separate entity, Moto Networks is too small to continue on its own. Meanwhile, NSN desperately needs to increase its market share in the U.S., where it trails far behind its prime competitors Ericsson (NASDAQ:ERIC) and Alcatel-Lucent (NYSE:ALU), both of whom have grown their North American presence through similar, albeit larger acquisitions. (CP: What Nortel’s 3G/4G assets will do for Ericsson).

NSN has landed some big contracts in recent years, such as its $7 billion deal with LightSqaured (CP: NSN to ramp up U.S. operations in wake of $7B LTE deal), but it’s also missed out on the big LTE radio contracts awarded by Verizon Wireless (NYSE:VZ, NYSE:VOD) and AT&T (NYSE:T). Some of the contracts it did win wound up fizzling out while others are still in holding patterns. The result is NSN’s North American revenues still remain tiny compared to its other global businesses.

North America head Sue Spradley is leaving NSN this week, and will be replaced by former Asia-Pac head Rick Corker (Unfiltered: Spradley leaving NSN). Corker would therefore oversee much of the integration of Motorola Networks into NSN’s global portfolio. Headquartered in Chicago, Motorola has 7500 employees in the non-iDEN commercial network divisions NSN will acquire. CEO Rajeev Suri last year said that NSN would keep the Chicago offices—with their 1600 Illinois-based employees—open as well as maintain operations at many of the Motorola’s North American R&D centers (CP: NSN keeping Moto Networks local).