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Long MOT, Short SPY
According to today's Heard on the Street Column in The Wall Street Journal, investors currently ascribe little value to Motorola's loss-making handset business. The value of Motorola's other businesses selling set-top boxes, wireless enterprise solutions and public-safety communications, among other things add up to about $4.80 a share, says Ehud Gelblum of Morgan Stanley. Add $2 of net cash and 80 cents for the networks business that Motorola is selling to Nokia Siemens Networks, and you get $7.60, just below Friday's closing stock price of $7.75.
There are risks to those numbers. For example, the attractive public-safety business could be squeezed by state and local government budget cuts. Even so, investors seem to be getting the handset business almost for free. They will soon have to give it a stand-alone value when it is spun out along with set-top boxes early next year. Click to view this pair.
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