New Motorola stocks rise in Wall Street debut
Motorola Mobility, Motorola Solutions each post strong gains on NYSE
It was a good first day at school for the two new stocks representing the divisions of Motorola that officially split on Tuesday to become their own publicly traded companies.
(Also see: Starting Tuesday, Motorola becomes two companies)
Motorola Mobility (NYSE: MMI), the former wireless-handset division of Motorola, finished its first trading session up 2.88, or 9.5 percent to 33.12. Shares reached as high as 33.45 on volume of 12.36 million.
Motorola Solutions (NYSE: MSI), which makes public-safety communications equipment and enterprise hardware, and also provides networking services to government and business, also debuted strongly on the trading floor, with shares climbing 2.46, or 6.6 percent, to 39.77. MSI peaked on Tuesday at 39.99, with 12.8 million shares being traded.
The buzz wore off a little after-hours Tuesday, with Motorola Mobility down 47 cents, or 1.4 percent, to 32.65, and Motorola Solutions down even more -- 2.46, or 6.2 percent, to 37.31. Those prices were from right around 5 p.m.
Motorola's board of directors voted two years ago to split the company in two to extract more value from its numerous lines of business. Early indications are that Motorola Mobility, which also includes Motorola's cable set-top box business, is popular in the analyst community. According to MarketWatch, 10 of 15 brokers covering MMI rate it a buy, with four "neutrals" and one sell.
MMI is likely to be a more volatile ride for investors than MSI. Motorola Mobility has a big strength in its Droid line of smartphones, but it faces a stiff test almost immediately, when Verizon Wireless starts to sell Apple's iPhone for the first time, which could happen this month. For the past year, smartphones powered by Google's Android mobile OS have been blowing away the BlackBerry and other competitors in Verizon stores. Now Verizon customers soon will have another option, one that is almost universally well-regarded.
Indeed, it's the Verizon iPhone threat that J.P. Morgan's Rod Hall cites in starting MMI with a "sell" rating.
Motorola Solutions has a more stable business selling communications and networking equipment to government and businesses, with a solid (if unspectacular) revenue-growth record. Deutsche Bank began coverage of MSI with a “hold” rating and a price target of $38 a share, while Barclays Capital set an “equal weight” rating (essentially "neutral") and a target share price of $43.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.