After Unit Sale, Confusion Still Reigns at Motorola (MOT, NOK, SI)

Motorola Inc. (NYSE: MOT) shares are up today on news that the Nokia-Siemens JV, owned by Nokia Corp. (NYSE: NOK) and by Siemens AG (NYSE: SI), is paying about $1.2 billion for Motorola’s network equipment business operations.  While part of the Motorola’s break-up strategy, it seems that confusion remains over the company’s long-term prospects.

For starters, the Nokia-Siemens group will get about 7,500 Motorola employees from the wireless networks infrastructure unit.  If the combined operations remain static, this will make the Nokia-Siemens JV the #2 player in Japan and the #3 player in the U.S. for wireless networking equipment while giving it tighter customer relationships and bringing in new customers.

After losing out to Ciena on the Nortel metro ethernet business bid, the Nokia-Siemens JV needed today’s acquisition to fill in holes in its offerings.  The JV effectively wins over the CDMA and GSM portfolio, while Motorola is holding on to its iDEN portfolio and related patents.

Effectively, this narrows the break-up process down to cellphones, set-top cable boxes, and public safety with other communications devices.  The break-up is expected to occur in Q1-2011, and it was not clear where this $1.2 billion in cash will end up in that break-up process.

Motorola is getting the benefit of the doubt for a one-day reaction as shares are up almost 4% at $7.80.  With an $18 billion market cap and over $8.5 billion between cash and its securities, today’s move feels right despite the ultimate direction being unknown.  With a 52-week range of $6.04 to $9.45 and a long-term base of shareholders who are buried (long and wrong) in the stock at $15, $20,  or higher, Motorola’s current share price is indicative of a perpetual turnaround story that just won’t turn around on its own.

Trading volume has so far not even reached an average day’s trading volume.  We have a mixed ADR reaction from the acquirers: Nokia is up 0.35% at $8.77 and Siemens is down 0.4% at $95.00.

After more than fifteen years of covering stocks, it seems that the never-ending Motorola restructuring is finally coming to an end.  Now we just have to see about the outlook for its remaining units.

JON C. OGG