If Motorola does spin off its slumping, money-losing mobile phone division, shareholders will be left with two segments with ungainly names: “Home and Networks Mobility” and “Enterprise Mobility Solutions.” Combined, they would have accounted for $17.7 billion — or 48% — of Motorola’s $36.6 billion 2007 revenue, with yearly revenue growth of 22%. The two segments would have recorded $1.9 billion operating profit last year; the mobile phone division posted a $1.2 billion operating loss.
So what’s a sliced-and-diced Motorola worth? In a note today, Citibank analyst Jim Suva does two different sum-of-parts exercises and says $16 to $17 per share, or about 33% more than the $12.65 it’s trading at today.
In a price-to-sales analysis, based on 2008 estimates, Jim concludes that Mobile Devices is worth $8.14 per share, Home & Networks is worth $4.86 per share, and Enterprise Mobility is worth $3.99 per share — that’s $17. In a second, enterprise value-to-sales analysis based on 2008 sales, he gets $6.02 per share for Mobile Devices, $5.08 per share for Home & Networks, and $4.97 per share for Enterprise Mobility — total $16.07.
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