Google to Dump Cable Set-top Box — NY Post (GOOG, MMI, CSCO, AAPL)

An exclusive report from the New York Post cites unnamed sources who say that Google Inc. (NASDAQ: GOOG) is trying to sell the cable set-top box business that it will acquire with Motorola Mobility Inc. (NYSE: MMI) once the $12.5 billion deal is completed. The report also notes that Cisco Systems Inc. (NASDAQ: CSCO) is looking for a buyer for its Scientific Atlanta division, the other large set-top box maker.

Google and Apple Inc. (NASDAQ: AAPL) are both working on delivering an Internet-connected device to replace the cable boxes. Google TV and Apple TV are both available now, but neither has yet made a huge impression on buyers. Other Internet-TV boxes from Roku and Boxee are also on the market, with Roku claiming to have sold 2.5 million of its “over-the-top” devices.

There is speculation that private equity firms are getting interested in the legacy set-top boxes, and that they “may look to milk the business by rolling up the main players.”

Motorola has tried before to sell its set-top box business, but the asking price of $4.5 billion didn’t attract any takers. If Google can actually get rid of the business, it will likely be for far less than that amount.