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Filed by Motorola, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Motorola, Inc.
Commission File No. 001-07221
On February 22, 2000, Motorola, Inc., a Delaware corporation, announced its
proposed acquisition of C-Port Corporation, a Delaware corporation. The
following is a transcript of a media conference call held by Motorola and C-Port
representatives held on February 22, 2000:
MSL Global
Conference Call
February 22, 2000
OPERATOR: Ladies and gentlemen, thank you for standing by and welcome to the
Motorola Conference Call. At this time all participants are in a listen only
mode. Later we will conduct a question and answer session. Instructions will be
given at that time. If you should require assistance during this conference,
please depress star followed by zero. As a reminder, this conference is being
recorded. It now gives me pleasure to introduce our host for today's conference,
Mr. Phill Grove. Please go ahead, sir.
PHILL GROVE: Okay, good morning everybody and thanks for joining us this
morning. I am Phillip Grove, the Director of Communications and Marketing for
Motorola's Semiconductor Networking and Computing Systems Group.
With me today are Fred Tucker, President of Motorola Semiconductor Product
Sector, and Executive Vice President and Deputy to the Chief Executive Office of
Motorola, Inc. Also we have Daniel Artusi, the Corporate Vice President and
General Manager for our Networking and Computing Systems Group; and Larry
Walker, the Chief Executive Officer of the C-Port Corporation.
I am sure that most of you have seen the news release we issued early this
morning about the planned acquisition of C-Port by Motorola. We will discuss the
announcement for about 15 minutes this morning, and then we will turn it over to
you for questions. With that, let me now introduce Fred Tucker.
FRED TUCKER: Thanks Phill. As the world's number one producer of imbedded
processors, Motorola offers multiple DigitalDNA(TM) solutions which enable our
customers to create new business opportunities in a variety of markets. Nowhere
is this more true than in the communications markets.
As our industry shifts focus from the PC to the network, new challenges emerge.
We need to be able to give the network intelligence, give it the ability to be
upgraded through software rather than through constant rewiring and equipment
upgrades. Giving product intelligence is what DigitalDNA(TM) technology is all
about. It is something that we have much experience in.
That is why the acquisition of C-Port is an exciting event for Motorola. We
pioneered the communications processor business more than a decade ago, and have
been a leader since. With this acquisition we complement our portfolio with
solutions for high bandwidth datapath switching, just as the Internet is driving
bandwidth demand at unprecedented levels.
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Today Motorola and C-Port deliver what we call the heart of smart in the form
of DigitalDNA(TM) technology to the networking market. Combining Motorola's host
and integrated communications processes, with C-Port's network processor means
we now offer a solution for all of the intelligent, programmable functions
inside network equipment manufacturers products. We are enabling smarter
networks faster.
As we have demonstrated, sometimes it makes more sense to acquire unique
capabilities for specific markets than to develop them in-house. This is
particularly true in the Internet era where time to market has become such a
critical, competitive issue.
We are building a new, much stronger Motorola, and a tremendous part of our
strength today, in the light speed environment of the technology industries, is
being able to deliver a full range of solutions to our customers.
Given the explosion of demand for broadband communications capacity, today we
are in a terrific position to ride this wave by seeking to provide everything
our customers require, to allow new services over the Internet. And that is
great for our customers, and it is great for Motorola.
Furthermore, we see an explosion of demand for our semiconductor products, tied
into this increase in Internet usage. And a lot of this growth is being fueled
by the convergence of the Internet and wireless communications devices where we
are a leader.
We believe we are at the very earliest stage of a communications revolution,
that will eventually impact billions of consumers as the entire planet gets
connected. Wireless devices that deliver Internet access have only recently hit
the market, but the potential size of this market is mind boggling, and we are
in the best position to benefit from this revolution by providing the
semiconductors and other network elements from cable and ADSL modems to wireless
handsets. That is why the new Motorola is so exciting.
Now Daniel and Larry can go into more detail regarding how C-Port's products
help enable this convergence, but suffice it to say, this is one reason we are
so delighted to welcome C-Port to the Motorola family. Now I would like to turn
over the floor to Daniel.
DANIEL ARTUSI: Thanks Fred. This is a great day for the Motorola Semiconductor
public sector, and its Networking and Computing systems group.
Up until now our process has controlled the administrative function of the
network, plus the data in SOHO and access point to the network. The
infrastructure of the network, our communications processors run the equipment,
but don't handle every packet transported today. Today these are handled by
proprietary ASICs, Application Specific Integrated Circuits. ASICs can handle
high speed data, but unfortunately they take a long time to design and cannot be
reprogrammed once they are fabricated.
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Thus if a service provider wants to upgrade their equipment to provide a new
service, or enhance a feature, they have to buy new equipment and rewire the
networks. This is expensive and time consuming. Fortunately, the announcement we
are making today about the acquisition of C-Port, this will soon no longer be
necessary.
As you know, we have been a leader in helping customers build network and
equipment for more than a decade. Specifically we are a leading provider of
communications processing. In fact we have more than 300 customers and 4,000
design wins for these processors today.
However, as noted by Fred, our customers are demanding an even greater increase
in the rate of intelligence in the network for a variety of reasons.
Fundamentally there is a need to deliver new services via the Internet and other
networks including wireless. These services range from advanced billing, to
streaming video, to Internet telephony.
And that is a major reason why we have decided to acquire C-Port Corporation.
What C-Port adds to the equation is bringing the ultimate intelligence to the
network by making it fully programmable.
And they do this because they have developed one of the most advanced network
processors on the market. The key word here is programmable. These are
programmable network processors, a special class of communications processors,
which will allow the manufacturers of optical networking and Internet switching
equipment, to provide the new services at a dramatically reduced time-to-market.
I will let Larry explain how this works in a few minutes.
It is important to note that this is a brand new market but is one that is
expected to expand dramatically over the next few years. In fact, recent
Dataquest reports suggest this should reach $1 billion within the next three
years. The evolution of the market suggests that this programmable network
processor will replace the ASICs, already mentioned, used in today's networking
equipment.
So how will C-Port fit into the Motorola family? C-Port will work closely with
our Networking and Computing systems group, however it will remain at its
Massachusetts headquarters, and will keep its talented management in place. We
want to preserve what has been built, keep the talent, but give them Motorola's
expanded resources to help us speed up the time-to-market. They will, therefore,
continue to market under the C-Port brand. Also, while C-Port has focused its
marketing effort only on U.S. customers, we believe there is a significant
market for these network processors in Europe and Asia, and we will utilize our
sales infrastructure to market this technology on a global scale.
What does having this technology mean for Motorola? It means we can now offer
our customers a scaleable family of solutions for administration, protocol
processing, and
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datapath switching of data from the SOHO to the edge, to the core of the
network. Basically everything that makes network smart. Also, C-Port's
technology is entirely complementary to Motorola's networking, communications
processor product line. In fact, C-Port supplies a class of communications
processors that we have never supplied ourselves. This will enable us to meet
our customers' needs and offer one-stop shopping, one-stop smart.
Finally, by putting Motorola's world class resources and infrastructure behind
C-Port's advanced architecture, we'll be able to bring this outstanding
technology to more customers around the world, and enable a faster time-to-
market than was previously possible. It will enable a smart network faster.
At this point I would like to introduce Larry Walker, CEO, President, and
Founder of C-Port Corporation.
LARRY WALKER: Thanks Dan. This is also a great, great day for C-Port, our
customers and our employees. C-Port has been on a path to radically improve the
way network OEMs build the devices that provide the basis for the next-
generation network infrastructure.
We have made significant progress over the last two years in achieving that
goal, and we are absolutely thrilled by this new opportunity to accelerate that
progress through the acquisition announced today by Motorola, which is the clear
leader in the communications processor space.
The pace at which C-Port's revolutionary approach, which we call the C-Ware(TM)
Platform, has gained acceptance in the industry, has surprised even us. It is
clearly an idea whose time has come, due entirely to the intense demand our
customers face, to deliver advanced features and services to meet their
customers' needs.
Let me take a quick step back to explain in more detail what we do at C-Port. As
you all know the communications industry is all about time-to-market. In the
early days of networking, high-end networking devices were based on networking
software, running on conventional communications processors, often those from
Motorola.
This software approach made it easy for the vendors to respond to new protocols
and add new features to solutions that are still used today in SOHO and in some
access applications. Over time, however, bandwidth requirements increased
exponentially, leading the network vendors to put more and more functionality in
application-specific hardware, the ASICs that Dan mentioned, to deliver top
performance.
The problem with this hardware approach is that it took, on average, two years
to develop high end products. That is clearly too long and too expensive for
such a dynamic marketplace. Adding to the problem is the fact that after pouring
in all this investment, products would have a very short, useful lifetime once
deployed.
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Enter C-Port. We offer network equipment vendors the industry's first fully
programmable, high performance network processor, the C-5 DCP(TM), designed
specifically to run networking software for high-end network solutions.
We combine the C-5 DCP(TM) with a robust development environment and a rich
programming interface created using open standards. Fully programmable means the
hardware, the chip itself, is independent of the physical layer of the network
infrastructure and can therefore be programmed to support a broad range of
applications the customer requires.
In fact, each C-5 DCP(TM) can support multiple protocols and applications
concurrently, which is a key requirement at the edges of the network, such as at
the optical edge, where requirements are constantly changing.
We extended the "fully programmable" concept to mean "easily programmable," by
enabling developers to program the C-5 DCP(TM) in the ubiquitous language of the
communications industry, the C language. This is consistent with C-Port's vision
to use industry standard tools, language, and interfaces, to enable our
customers to rapidly design and deploy leading-edge, high-end solutions.
Together, C-Port and Motorola will work to solve more customer problems, and
deliver smart, high performance platforms ahead of our competition. C-Port's
goal two years ago was to win by helping our customers win, and together with
Motorola we will continue to do exactly that.
PHILL GROVE: Thank you all for participating in this announcement. Through the
conference call facilitator we will be taking your questions in just a moment. I
would like to turn it back over to them now, however if you would like to have
additional information we have just made public a new website,
www.motorola.com/semiconductors/smartnetworks.
You can find the press release on that, as well as a fact sheet of some
additional information. The press release is also available on Business Wire. At
this point I would like to turn it over to the facilitators to take your
questions.
OPERATOR: Thank you, Mr. Grove. Ladies and gentlemen, if you wish to ask a
question please depress the one on your touch tone phone. You will hear a tone
indicating you have been placed in queue. If you wish to remove yourself from
queue please depress the pound key. If you are using a speaker phone please pick
up your handset before pressing the numbers.
Our first question comes from Mr. Loring Worble with EE Times. Go ahead, sir,
your line is open.
LORING WORBLE: Congratulations. This question probably goes initially for Larry,
although Dan you might want to comment on it as well. Last week at the Intel
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Developer's Forum the company made quite a big deal about using the Net
Boost software to unify the soft com and the digital StrongARM
architectures.
I am wondering whether the C-Ware software environment, including the so
called CPIs is powerful enough, as it is right now, to create one
programming environment, both Power QUICC and the C-5, or whether you are
going to have to retain parallel paths for developers for the current time
period, and just kind of unify the two architectures in the future.
LARRY WALKER: Thanks for the congratulations. I appreciate that very much.
I think the simple answer to your question is that it is both Dan's and my
view, and our vision, that a common programming interface is essential to
the industry, not only essential to this deal happening, but it is
essential to the industry. As you know, that is why both of us have been
on that kick, on that gig for quite sometime.
As a result, we really believe strongly that the right way to do that is
through the forum that you mentioned, through the CPIX Forum, and we
will both continue to participate in that, and participate obviously
together in the future.
So the strong answer to your question is we believe that is the right way
to go, and we are both committed to making that happen.
LORING WORBLE: Very good.
OPERATOR: Our next question comes from Tim McLaughlin with the Boston
Herald.
TIM MCLAUGHLIN: Hi Mr. Walker. I was wondering, could you give us any
sort of idea what kind of revenue C-Port had in 1999 and what you expect
in the coming year?
LARRY WALKER: Tim, this is Larry. Thanks very much for the question. That
is not something we have commented on in the past, and don't feel that it
is the right thing for us to comment on right now. Obviously we believe
the market for these products is very strong. Dataquest has a number of
billion dollars for this market in the year 2003, and Dan and I are both
intent on working hard to get our share of that market.
TIM MCLAUGHLIN: Thank you.
OPERATOR: And our next question comes from Paula Musich with PC Week.
PAULA MUSICH: Thank you, congratulations guys. I have a couple for you, if
you don't mind. First question, what are the terms of the agreement? Can
you all hear me?
DANIEL ARTUSI: Yes, this is Dan Artusi. The terms of the agreement are
this is a stock transaction. We have acquired, as indicated on our press
release, approximately $430 million in all the stock transactions.
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PAULA MUSICH: Okay, and is C-Port actually shipping product right now?
LARRY WALKER: Yes, Paula, this is Larry. Absolutely, shipping both software and
hardware.
PAULA MUSICH: Your competitors don't seem to think so.
LARRY WALKER: Well they are ill-informed, not surprisingly.
PAULA MUSICH: Yes, and I guess the other question, there are some pretty
significant players in the market, even though it hasn't taken off yet in both
Intel and IBM. How is Motorola planning to compete against those very
significant players who are making some pretty nice inroads with some of the
big four networking companies already?
DANIEL ARTUSI: As was indicated earlier by Fred, we have been in the
communications process of market. We are probably the best kept secret in the
industry today. We have been in this network, or process to market, for 10
years. We introduced our first product exactly 10 years ago, and we have 4,000
design wins, so our family, our Power QUICC family of products.
We have a very, very strong presence, even before it became fashionable to talk
about networking processors or communications processors. So they give us a
high-end product for a huge market, so this is a perfect complement to our
already existing product line. So we have a presence in that market. We work
with the customers, we are used to participating in those designs, and this is
just an expansion of our portfolio, with road map and our strategy.
PAULA MUSICH: Does C-Port have any significant design wins in the large
networking manufacturer space?
LARRY WALKER: Yes we do.
PAULA MUSICH: Can you say who those are?
LARRY WALKER: Not at this point. As you know the customers are awfully
sensitive about being named because they like to have their own splash when it
is the right time for their product to be coming out. So we don't have any
permission among the large companies, that we have some wins with, to announce
anything.
PAULA MUSICH: Thank you.
OPERATOR: And waiting with a question is Mr. Craig Matsumoto with EE Times. Go
ahead, sir, your line is open.
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CRAIG MATSUMOTO: Hi, this is more for the Motorola guys than for Larry.
I am curious that with multiple network processor kind of architectures
out there, what the advantages were for C-Port, why you would, why they
are the chosen ones that you acquired?
DANIEL ARTUSI: Well the first thing, and I was very involved in the
earlier stages of selection, the thing that attracted us was the platform
solution on the C-Ware(TM) that C-Port had put together. The software,
the programmability, the use of C as a programming tool for this
processor obviously was very attractive because productivity in software
development is very key. So that is one of the keys. And the architecture
is a very straightforward architecture with really (inaudible) appeal on
their solution.
CRAIG MATSUMOTO: Thanks.
OPERATOR: And our next question comes from Loring Worble with EE Times.
LORING WORBLE: Sorry we are monopolizing you guys. I did want to check,
Paul had mentioned IBM, which is a weird case because Motorola and IBM
worked rather closely in Sommerset, and then kind of drifted apart, but
C-Port and IBM have been collaborating very closely. Is this going to
turn into more or less of a troika with all three of you doing joint
marketing efforts, or shouldn't one assume that kind of thing?
UNIDENTIFIED SPEAKER: No that is not the case, Loring. There is no case
for a troika.
LORING WORBLE: Will you continue to use IBM as a foundry for C-5 or will
you try to push that over to Motorola as quick as possible.
DANIEL ARTUSI: The intention is to continue the strategy. Like I
indicated before, Larry and his team will operate as a fully independent
subsidiary of Motorola and they will continue with their manufacturing
strategy.
LORING WORBLE: Okay.
LARRY WALKER: Loring, just to expand on that. We really don't see any
reason for that to change at this time. We see our relationship with
them, as you know, extending through partnerships on both the fabric chip
that they have together with our C-5, as well as in working together in
CPIX, which as you know was initially started by, among others, IBM and
ourselves. So we have a very strong partnership. We don't see any reason
for that to change.
OPERATOR: And waiting with a question is Susan Decker with Bloomberg
News.
SUSAN DECKER: Good morning gentlemen. I was wondering, who is going to be
making the chips? Is it going to be Motorola, or is it going to be
C-Port? And also, are you considered competitors to like Altera and
Xylinks?
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LARRY WALKER: Yes, Susan, C-Port has previously announced that the manufacturing
partner for our wafer technology is IBM in Burlington, Vermont. And we intend to
continue to use them.
The answer to your second question about Altera and Xylinks, no, this is a
different kind of programmability that we are talking about here. This is
programmability in the same sense that the micro processor in your PC is
programmable.
It runs different applications, and then in the communications space running a
different application means running an ATM protocol on top of a Sonnet
transport, or it means running some sort of IP protocol on top of an Ethernet
transport. Things like that, but it is very analogous to the microprocessor
inside your PC in the sense that is also highly programmable. This is highly
programmable but for communications functions.
SUSAN DECKER: Thank you.
PHILL GROVE: However, let me just add, it is a competitor to ASICs, and ASIC
suppliers, in the sense that this solution will displace ASIC-based solutions
in the future.
SUSAN DECKER: Thank you.
OPERATOR: Ladies and gentlemen, if there are any additional questions please
press the one at this time. I would now like to turn the conference back over to
Mr. Phill Grove for further commentary. Please go ahead, sir.
PHILL GROVE: Okay, well once again thank you very much for your participation
today. If you have got further questions, or would like to reach us for a one on
one interview, please call Anne Marie Furie at MS&L Global Technology. Her
number is 805-494-0830, or she can also be reached at 805-230-8203. They can
arrange an interview with you to follow up. Thank you very much.
OPERATOR: Ladies and gentlemen, this conference will be available for reply
after 11:30 a.m. eastern standard time through Tuesday, March 14th at midnight.
You may access the AT&T Executive Playback Service at any time by dialing 1-800-
475-6701 and entering the access code 503114.
That does conclude our conference for today. Thank you for your participation
and for using the AT&T Executive Teleconference Service. You may now disconnect.
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Documents relevant to the acquisition:
Motorola will be filing a registration statement containing a proxy
statement/prospectus and other relevant documents concerning Motorola's
acquisition of C-Port with the United States Securities and Exchange Commission
(the "SEC"). WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY
OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the
documents free of charge at the SEC's web site, www.sec.gov. In addition,
documents filed with the SEC by Motorola will be available free of charge by
contacting Motorola Investor Relations at 1303 East Algonquin Road, Schaumburg,
Illinois 60196, Telephone (800) 262-8509. READ THE PROXY STATEMENT/PROSPECTUS
CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
Business Risks:
Statements about Motorola's future financial performance, the likelihood that
the transaction will be consummated in a timely manner and the financial impact
of the transaction are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. It is uncertain whether any
of the events anticipated by the forward-looking statements will transpire or
occur, or, if any of them do so, what impact they will have on the results of
operations and financial condition of the Semiconductor Products Sector,
Motorola or the price of its stock. Motorola wishes to caution the reader that
the following factors and those in its 1999 Proxy Statement on pages F-15
through F-18, in its Form 10-Q for the period ending October 2, 1999, and in its
other SEC filings could cause the actual results of Motorola or the
Semiconductor Products Sector to differ materially from those in the forward-
looking statements: the ability of the companies to successfully integrate C-
Port's business and capitalize on the combined technologies; and factors
affecting the future evolution of the communications processor market and
related technology.
