Motorola Valuation: The Street Has Little Faith in Cell Phone Segment

Following up on my initial Motorola (MOT) post, here are my numbers on the company's networking and mobility (non cell phone) segment. With MOT shares languishing near multi-year lows at nine dollars, doing individual valuations on both segments that will be spun off next year can help us figure out if there is much downside left in the stock.

My calculation is meant to be realistic, rather than overly conservative or aggressive. I get to about $8 per share for Motorola's non cell phone business, which just shows you how little faith Wall Street has in the cell phone segment right now. Let me know if you think tweaks in my numbers are warranted.

Full Disclosure: No position in MOT at the time of writing.

Comments

[Denis]

I am thinking along the same lines, but it seems your main assumption of target P/E of 12.5 for the fast-growing biz is way off the charts. Even in this market the lowest P/E will be around 15x, and when the things normalize, 20-25x will be reasonable. I would say non-handset biz is worth about $26bn, and handsets should be sold for about 9.5bn (0.5x sales), which gives MOT an upside to intrinsic value of 64%