It's long been known that Motorola
In this video, Erin Corr and Fool.com analyst Eric Bleeker look at Motorola's solution to splitting itself up. Motorola is going to take the company's large pile of cash, pay down some debt, and essentially give the remaining cash to a cell phone spin-off.
The cell-phone unit is still bleeding cash, but under a plan focusing on Google's
So is either one of the spin-offs a buy? Eric is still leery of the cell-phone division; there are a number of companies shifting away from cheaper phones to smartphones focusing on Google's Android. As companies such as Sony Ericsson, Samsung, and HTC push more models onto store shelves, they'll give future top-of-the-line Motorola products more competition, and all phones will essentially offer the same underlying experience.
As far as the networking group, or the "solutions" group as it's being called, there's more potential for investors. It's a pretty boring business that makes radios, bar-code scanners, and cellular-base station equipment, but up until the downturn it was growing pretty well and is stable. Eric says if the spinoff beings trading with an expected P/E ratio roughly in line with competitors, in the low teens, it wouldn't be a home run, but it'd be a safe play for investors.
To hear our full thoughts on Motorola and its planned spinoff, watch the video below.