Does it also get the cash?
Just a short addendum the news that Motorola is now considering splitting itself in two. I’ve had a look round and can’t see much made of this little snippet from Motorola.
“The Enterprise Mobility and Networks business will be capitalized in a manner that will achieve an investment grade rating and will be the entity responsible for Motorola’s existing public market debt at the time of separation.”
In other words, the handset and set-top business will be cut adrift free from debt. But the networks business will carry the debt.
You can look at this in two ways – either the handset business is so fragile that it cannot be encumbered with ongoing debt. Or you can take the view that the networks business is so busted that only an acquisition is likely in the long term, so we may as well load the debt into that transaction.
How much debt is that, by the way, we asked Motorola? Answer: $3.9 billion long term debt as of the end of 2009. The company also has $8 billion cash, it said. And with both new entities promised to be “well-capitalised” and the networks business, as we said, “capitalised in a manner that will achieve an investment grade rating”, it could also be that it takes the majority of the cash.