Manufacturer Rockwell Automation Inc. (ROK.N: Quote, Profile, Research) on Tuesday said it plans to sell off two industrial components units representing nearly one fifth its revenue as it shifts from making gears and motors to high-tech factory automation systems.

The units on the block -- Dodge mechanical and Reliance Electric motors and motor repair services -- make electric motors to power conveyor belts and similar industrial systems, as well as the bearings and gears used to transmit mechanical power through factories, mines and oil operations.


The company did not specify how much it thought the businesses would fetch at auction, but said it expects them to generate fiscal 2006 revenue of about $1 billion and operating margins of about 15 percent.

In a research note, Deutsche Bank analyst Nigel Coe wrote the businesses could sell for a combined $1.5 billion to $2 billion.

"The key is how (Rockwell) would redeploy the capital, as it is not the most acquisitive company," Coe wrote.

Rockwell Automation will put some of the proceeds of the deal toward dividends or share buybacks, said Chief Financial Officer James Gelly on a conference call with analysts.

"We're not selling power systems out of financial need," Gelly said. "We're separating these two parts of Rockwell because each deserves capital investment to fuel aggressive global growth strategies ... We'll continue to favor investments on high-return organic growth initiatives."