Investors working out value of post-breakup Motorolas

NEW YORK -- The stock market on Friday started working out the relative values of the two companies Motorola Inc. will break into on Jan. 4, as their respective shares started trading on a "when-issued" basis.

In opening trading on the New York Stock Exchange, the market implied that Motorola Mobility Holdings Inc., which will make cell phones and cable set-top boxes, would be worth $8.1 billion, while Motorola Solutions Inc., which will make such devices as police radios and bar-code scanners, would be worth $12.4 billion.

Sentiment shifted toward Motorola Solutions, and at the end of the day, the valuations were $7.36 billion for Mobility and $13.6 billion for Solutions. Mobility shares closed at $25.05 and Solutions shares were at $40.50.

In effect, investors are figuring out how to apportion Motorola Inc.'s $20.9 billion market cap between the two parts. Shares of the Schaumburg-based company ended unchanged at $8.88. They hit a 52-week high of $8.95 on Thursday.

"When issued" trades are settled after the Jan. 4 breakup, when Motorola shareholders of record on Dec. 21 will receive one share of Motorola Mobility for every eight shares they hold. Motorola shares will then go through a 1-for-7 reverse split and become Motorola Solutions shares.

The businesses that will become Motorola Mobility had $2.9 billion in sales in the most recent quarter, compared with $1.9 billion for Motorola Solutions. However, the $321 million in operating earnings at Solutions dwarfed the $3 million that Mobility made.