I find it hard to believe that the mobile (handset) business is worth not much more than $0. That's an incredible drop from just a couple of years ago. At the very low value, why couldn't a RIMM (or even a Palm) come in and make a lowball offer to acquire the technology and technologists that, after all, did come up with the RAZR when driven by the right marketing directives. There's a lot of talent and intellectual property that should have some value to someone interested in producing handsets that operate well on the cellular networks. In fact, it might just be the edge Palm needs to stay competitive in the smart phone market. It will be interesting to see this play out.
The market bets Motorola cannot fix it handset business
Posted Jun 21st 2008 12:40PM by Douglas McIntyre
Filed under: Earnings reports, Analyst upgrades and downgrades, Industry, Competitive strategy, Apple Inc (AAPL), Motorola (MOT), Nokia Corp. (NOK), Sprint Nextel Corp (S), Research in Motion (RIMM)
The week was full of news about handsets. Sprint (NYSE: S) said it would launch an "iPhone killer," a $129 phone from Samsung. Many brokerage firms upped estimates for Apple (NYSE: AAPL) iPhone sales as it appears that the demand for the new 3G version will be tremendous. Nokia (NYSE: NOK) launched its E71 and E66 high-end handsets. Lehman upped its targets for earnings estimates at RIM (NASDAQ: RIMM), the maker of the BlackBerry.
And Motorola (NYSE: MOT) shares hit a five-year low at $7.61. The company did not launch any new products. No one on Wall Street upped forecasts on the company. All that was clear is that the firm is taking a worse beating as each month passes.
Motorola plans to spin-off its handset business and keep its home networking and enterprise operations. The entire company has a market cap of under $18 billion now.
Based on Motorola's last 10-Q, the two units the company is keeping have an annual revenue run-rate of over $16 billion. They should make about $1.7 billion in operating profit in 2008. By many measures, together they would be worth $18 billion on their own.
It is a spectacular sign of how bad things are at Motorola's handset business, that, as an enterprise, it may have no financial value at all. Its market share is dropping too fast and its is losing too much money.
MOT may not even be able to give the operation away for nothing.
Douglas A. McIntyre is an editor at 247wallst.com.
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