Moto: Spin or Sale?

Analysts are already speculating about what Motorola Inc. (NYSE: MOT) might do with its mobile device business if it goes ahead with a possible split-up of the company. Selling, or spinning off, the handset unit is seen as the most likely option, although analysts question how well that would actually help the phone division recover. The Schaumburg, Ill.-based company said yesterday it's considering a "structural and strategic realignment" of its businesses. (See Moto Considers the Splits.) Motorola has already put a handset spinoff on the table as one of the possible strategies. It says, however, that it will not comment further until a strategy is finalized and approved by the board.

UBS Investment Bank analyst Maynard Um values the handset division at between $7.5 billion and $11.5 billion. Um doesn't think that there are many potential buyers for the unit, however.

"Only a limited number of [potential buyers] are capable or willing," Um writes in a research note, adding that LG Electronics Inc. (London: LGLD; Korea: 6657.KS) or Samsung Corp. could "take a look."

Um also names Dell Technologies (Nasdaq: DELL) as a "possible long shot." He notes that Motorola's former handset chief, Ron Garriques, is now at Dell.

Nomura Securities analyst Richard Windsor believes some Chinese vendors could be interested in the unit. "Potential buyers could include Chinese handset makers or ODMs or other hardware [PCs] makers looking to get into mobile phones," he says.

None of the analysts, however, mention Motorola's No. 1 rival, Nokia Corp. (NYSE: NOK), as a possible suitor.

Windsor suggests that a spinoff or sale wouldn't be good for the prospects of the phone unit itself. "This type of upheaval is the last thing that the handset business needs at this point in time, he writes. "A change of ownership would very likely cause all strategies for recovery to be put on hold, further pushing out the much needed turnaround." It would, however, likely be good news for current Motorola investors, Windsor says, because the real beneficiaries would be the home networking and enterprise mobility businesses, whose value is being ignored.

— Dan Jones, Site Editor, Unstrung

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