Rumor Mill:Google to ditch Motorola’s set-top box division

Google (NASDAQ:GOOG) is considering selling Motorola Mobility’s (NYSE:MMI) set-top box business,according to a report in the New York Post

The report,which cited unnamed sources,said Google has hired Frank Quattrone’s investment bank,Qatalyst Partners,and Barclays Capital to look for potential buyers. The report said that Google may unload the business in part because MSOs have been cutting back on purchases of Motorola’s set-top boxes. Google received regulatory approval for its $12.5 billion acquisition of Motorola,though the transaction is not yet final.

A Google spokeswoman declined to comment,according to the Post. A Motorola spokeswoman did not immediately respond to a request for comment,but the company did release a blog post that indicated it intends to maintain its set-top box business.

“With recent buzz around Smart TVs,game consoles,and other connected devices,there is continued discussion around the question:is the set-top dead? As the world leader in set-top technology,it is a question we hear all of the time,”Motorola wrote in the post. “The answer from our perspective,of course,is a resounding,“NO!”It’s just the opposite–the set-top’s role is rapidly evolving–to become the entertainment hub in the Living Room. And,with the number of connected devices predicted to increase to +24 billion in 2020,we see a very bright future.”

When Google announced the purchase of Motorola,it said the move was partly an effort to get access to Motorola’s portfolio of 7,000 patent  to protect other Android licensees from patent-infringement lawsuits. Some have worried that Google will favor Motorola in its Android business,but Android chief Andy Rubin has promised a “firewall”between Google’s Android development team and Motorola,and has said that Android will remain an open platform.

A sale of the set-top box business would represent a change from Google’s initial stated strategy. “Motorola is also a market leader in the home devices and video solutions business,”Google CEO Larry Page wrote in a blog post when the deal was announced in August. “With the transition to Internet Protocol,we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.”

Some analysts have speculated that Google could use Motorola’s home business,as it is formally known,to improve its Google TV product,or to bring Android more closely in line with other home entertainment offerings. In 2011,Motorola’s home business generated $3.5 billion in revenue,compared with $3.6 billion in 2010,but its operating earnings increased to $226 million from $152 million in 2010.

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