As Motorola Splits in Two, Might MSI Be a Compelling Buy?

Includes: GOOG, MSI
by: Eddy Elfenbein

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

The split was delayed and delayed and pushed back. Yesterday 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 (NYSE:MMI) and Motorola Solutions (NYSE: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 MMI to be crush to dust. Motorola Solutions, however, might be a compelling buy. MSI does the “everything else” part of Motorola’s business which includes things like barcode scanners and two-way radios. I’m not recommending it just yet, but I certainly want to keep an eye on them. A lot of these businesses are slowing growth but 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.

Disclosure: No positions