Motorola (MOT) To Split, Investors Yawn

Investors are yawning at news Motorola, Inc. (NYSE: MOT) will split into two independent, publicly-traded companies - Mobile Devices and Broadband & Mobility Solutions. After trading higher before and after the open, shares have moved down near unchanged - currently up 1%.

The stock is likely having this reaction as the move was highly anticipated. In January, Motorola announced they would explore options, including the split, after pressure from activist shareholder Carl Icahn. After initially moving higher on the hopes for the split, shares moved below the market price on the day of the announcement.

Icahn has high hope for Motorola even as many others have clearly thrown in the towel. Icahn is hoping his four nominees are elected to the board of director, where they could implement a successful turnaround plan. Last year, Icahn failed to get his representatives on the board. This year appears to be a different story, and shareholders will likely vote in favor of the new blood on the board.

Piper Jaffray analyst T. Michael Walkley, commenting on news of the split, said the restructuring could result in potential dis-economies of scale, citing costs for separate headquarters, the costs of running two separate public companies, and disruptions of some supply chain economies of scale. The firm has a sum-of-the-parts valuation on Motorola of $10, which is about the current market price. [LJ]

You May Also Be Interested In

• Jefferies Starts Busy Ming Group (1768:HK) at Buy
• Barclays Upgrades Independence Realty Trust (IRT) to Overweight
• Raymond James Downgrades TriCo Bancshares (TCBK) to Market Perform