Motorola 2010 Annual Report Download - page 33

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associated with sharing the Motorola Marks. In addition, there is a risk that, in the event of a bankruptcy of
Motorola Mobility, Motorola Mobility or its bankruptcy trustee may attempt to reject the license, or a bankruptcy
court may refuse to uphold the license or certain of its terms. Such a loss could negatively affect our business, results
of operations and financial condition.
We contributed a significant portfolio of intellectual property rights, including patents, to Motorola Mobility and
we are unable to leverage these intellectual property rights as we did prior to the Distribution of Motorola Mobility.
We contributed approximately 17,200 granted patents and approximately 8,000 pending patent applications
worldwide to Motorola Mobility in connection with the Distribution. Although we will have a perpetual, royalty
free license to these patents and other intellectual property rights, we no longer own them. As a result we will be
unable to leverage these intellectual property rights for purposes of generating licensing revenue or entering into
favorable licensing arrangements with third parties. As a result we may incur increased license fees or litigation
costs. Although we cannot predict the extent of such unanticipated costs, it is possible such costs could negatively
impact our financial results. These risks will increase if we are unable to complete the sale of our Networks
business.
Some contracts which were assigned from us or our affiliates to Motorola Mobility or its affiliates in connection
with the Separation require the consent or involvement of the counterparty to such an assignment, many of which
have not yet been obtained. Failure to obtain consents with or a termination of the agreement by any of our large
customers or suppliers, or interference by such customers or suppliers with such an assignment, could negatively
impact our financial condition and future results of operations.
The Master Separation and Distribution Agreement and various local transfer agreements provide that in
connection with the Separation of Motorola Mobility from us, a number of contracts with customers, suppliers,
landlords and other third-parties were assigned from us or our affiliates to Motorola Mobility or Motorola
Mobility’s affiliates. However, some of these contracts require the contractual counterparty’s consent to such an
assignment. Similarly, in some circumstances, our former Mobile Devices and/or Home business and another of our
business units were joint beneficiaries of contracts, and Motorola Mobility or we will need to enter into a new
agreement with the third-party to replicate the contract or assign the portion of the contract related to our
respective businesses. Because of the volume of agreements which require consent to assign, replicate or replace, this
process will not be completed for some time. It is possible that some parties may use the requirement of a consent to
seek more favorable contractual terms from us or seek to terminate the contract. If we are unable to complete the
assignments in a timely manner, we may remain primarily liable for contracts that should have been assigned to
Motorola Mobility, may be required to enter into new agreements at significantly less favorable terms or may find
our contracts terminated. The failure to complete the assignment of existing contracts, or the negotiation of new
agreements, with any of our large customers or key suppliers (including those that are single source or limited
source suppliers), or a termination of any of those arrangements, could negatively impact our financial condition
and future results of operations.
Completion of the Distribution of Motorola Mobility may not enhance long-term shareholder value.
We completed the Distribution of Motorola Mobility on January 4, 2011. At the time of this distribution, our
board and management team, after consultation with independent financial and legal advisors, believed that the
Distribution of Motorola Mobility as planned would enhance long-term shareholder value. There can be no
assurance, however, that the combined value of our common stock and the common stock of Motorola Mobility
will equal or exceed what the value of our common stock would have been in the absence of the Distribution in the
long term. The combined value of the common stock of the two companies following the Distribution could be
lower than anticipated for a variety of reasons, including, among others, the inability of Motorola Mobility to
compete effectively as an independent company, realignment of the stockholder population of both the Company
and Motorola Mobility in the period following the Distribution, and changes in market perception of the prospects
of the Company and Motorola Mobility as a consequence of the Distribution.