Motorola Inc. (MOT) is expected to be worth more as two separate companies when it splits into Motorola Mobility and Motorola Solutions next month. There is a range of value predictions coming out for both companies, but in almost every case analysts are saying especially positive things about Motorola’s phone business.
Alkesh Shah of Evercore Partners thinks the two companies will be worth about 13% more than they are today as one. “I think this is a good long term investment with the first positive catalyst being the spin,” he told Reuters. “Right now investors who wanted (Motorola Solutions) would shy away from Motorola because of handsets, which is more volatile.”
Matthew Thornton at Avian Securities is projecting revenue growth of as much as 24% for Motorola Mobility in 2011 and about 5% for Motorola Solutions. “My sense is that mobility is somewhat undervalued,” he said.
Following a split, shares will typically fall but eventually turn positive within a year to 18 months. As is often the case, Motorola’s split gives investors the opportunity to hedge bets more narrowly within the areas of business that they find most attractive.
Motorola's value could spike following split
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