Motorola Splits in Two

Nearly three years ago, Motorola announced plans to split itself in two. At the time, I said that instead of being one lousy company, Motorola would now be two lousy companies. That was a bit harsh.

The split was delayed and delayed and pushed back. Today it finally came. Motorola is no more.

One lesson for investors is to pay attention to when companies have spin-offs. Quite often, the less prominent company is a good buy.

The two companies that Motorola has now become are Motorola Mobility (MMI) and Motorola Solutions (MSI). First, what’s the over/under on how long these guys keep “Motorola” in their name? Twelve months?

The one to steer clear of is Motorola Mobility. I firmly expect these guys to be crushed to dust. Motorola Solutions, however, might be a compelling buy. They do the “everything else” part of Motorola’s business which is things like barcode scanners and two-way radios. I’m not recommending MSI just yet, but I certainly want to keep an eye on it. A lot of these businesses are slowing growth but are in well-protected industries.

Just to give you an idea, in the last quarter, MSI had revenue of $1.9 billion while MMI had revenue of $2.9 billion. Despite having $1 billion less in sales, MSI had operating income of $321 million to MMI’s $3 million.

Posted by on January 4th, 2011 at 3:43 pm


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