Motorola 2007 Annual Report Download - page 17

Payment Terms
Payment terms vary worldwide, depending on the arrangement. Contracts for wireless networks typically
include implementation milestones, such as delivery, installation and system acceptance, which generally take 30 to
180 days to complete. Invoicing the customer is dependent on the completion of the milestone. Customer payments
are generally due 30 to 60 days from the invoice date, and are typically limited to 90 days in regions outside
North America.
As required for competitive reasons, extended payment terms are provided to customers from time-to-time on
a limited basis. The segment’s payment terms are consistent with industry practice as many of our contracts are
awarded through a competitive bid process.
Regulatory Matters
Many of our products are subject to regulation by the FCC in the United States and other communications
regulatory agencies around the world. In addition, our customers, and their networks into which our products are
incorporated, are subject to government regulation. Government regulatory policies affecting either the willingness
or the ability of cable and telecom operators, wireless operators and wireline operators to offer certain services, or
the terms on which these operators offer the services and conduct their business, may have a material adverse
affect on the segment’s results. Motorola has developed products using trunking and data communications
technologies to enhance spectral efficiencies. The growth and results of the wireless communications industry may
be affected by regulations relating to the access to allocated spectrum for wireless communications users, especially
in urban areas where spectrum is heavily used.
Historically, reception of digital television programming from a cable broadband network has required a set-
top with security technology. This security technology has limited the availability of set-tops to those manufactured
by a few cable network manufacturers, including Motorola. FCC regulations requiring separation of security
functionality from set-tops that are aimed at increasing competition and encouraging the sale of set-tops in the
retail market became effective for most customers on July 1, 2007. Traditionally, cable service providers sold or
leased their set-top to their customer. As the retail market develops for set-tops and televisions capable of accepting
the security modules, sales of our set-tops may be negatively impacted.
The U.S. leads the world in spectrum deregulation, allowing new wireless communications technologies to be
developed and offered for sale. Examples include wireless local area network systems, such as WiFi, and wide area
network systems, such as WiMAX and LTE. Other countries have also deregulated portions of their available
spectrum to allow deployment of these and other technologies which can be offered without spectrum license costs.
Deregulation may introduce new competition and new opportunities for Motorola and our customers.
As more fully described under “Enterprise Mobility Solutions — Regulatory Matters” beginning on page 13 of
this Form 10-K, as television transmission and reception technology transitions from analog to more efficient
digital modes, various countries around the world are examining, and in some cases already pursuing, the
redevelopment of portions of the television spectrum. Certain segments of the spectrum that have historically been
utilized for analog television have now been designated to support new commercial communications systems and,
therefore, are expected to generate new business opportunities for Motorola in wireless and video technologies. In
the U.S., the FCC has begun the auction of spectrum in the 700 MHz band that will be reclaimed by the
government in February 2009. License for this spectrum may be used for flexible fixed, mobile and broadcast
applications. Although the auction winners will determine the best utilization of the acquired spectrum, both LTE
and WiMAX are candidates for technology selection. In addition, a contiguous portion of this spectrum has
generated interest for mobile TV applications.
Backlog
The segment’s backlog was $2.6 billion at December 31, 2007, compared to $3.2 billion at December 31,
2006. The 2007 order backlog is believed to be generally firm and 100% of that amount is expected to be
recognized as revenue during 2008. The forward-looking estimate of the firmness of such orders is subject to
future events that may cause the amount recognized to change.
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