SCHAUMBURG, Ill. ( TheStreet) -- After eight decades as a single entity, Motorola ( MOT) completed its split into two separately-traded companies Monday, as the electronics giant attempts to meet the needs of 21st-century consumers and businesses. Motorola, which emerged as a manufacturer of car radios in the 1930s, evolved into a highly diverse business by the turn of the century, selling a host of products and solutions from cutting-edge smartphones to public safety systems.
The decision to split, the company has said, was partially motivated by a desire to offer investors a choice of investing in two simple businesses, rather than in one complicated one. A consumer-focused company, Motorola Mobility ( MMI) will trade on the NYSE under the "MMI" symbol and is responsible for technologies such as handsets and tablets. Motorola Solutions ( MSI), with an "MSI" symbol, will handle the company's enterprise and networks businesses. Shares of Motorola Mobility opened at $31.17 on Tuesday, while Motorola Solutions' stock debuted at $37.30; both prices were steadily increasing throughout the morning. Wall Street's reaction to the split, particularly the advent of Motorola Mobility, has been generally positive, with Goldman Sachs initiating coverage of the consumer firm with a buy rating and $37 price target. "The stock's out-performance will be driven by strong top-line growth as a result of its 50% exposure to the fast-growing smartphone and tablet segments," said Goldman analyst Simona Jankowski, in a note released earlier this week. "Near term, we expect Motorola to be one of the first handset vendors to introduce new handsets for Verizon's ( VZ) new 4G/LTE network in the first half of 2011, which could be unveiled as early as this week at CES." Credit Suisse began its coverage of Motorola Mobility with an outperform rating and $41 price target, citing the potential for smartphone and tablet upside. On Tuesday, Sanjay Jha, CEO of Motorola Mobility, told CNBC that the company hopes to take the No. 1 position in the smartphone market as a result of its overhaul. While Motorola faces fierce competition against market leaders like Apple ( AAPL) and Samsung, its phone division has seen a resurgence over the past year, thanks to the debut of innovative handsets like the Droid X that run on Google's ( GOOG) Android operating system. Motorola Mobility is expected to make a big splash this week at the Consumer Electronics Show, tech's largest gadget gathering. Besides showing off super-fast 4G-equipped smartphones, Motorola will reportedly unveil its Droid Xoom, a tablet running Google's latest version of Android, Honeycomb. Reports said it will also feature a Tegra 2 graphics processor from Nvidia ( NVDA) and front- and rear-facing cameras, which the market leader, the iPad, lacks.
Jim Suva, an analyst at Citi, says that Motorola's "divorce" offers investors a choice between the high growth and high competitive risk of Motorola Mobility and the slower growth of Motorola Solutions, which has decent margins and cash flow. "The separation is a positive for the company and for shareholders as reflected in the 20% incremental equity value we believe the separation should unlock," said Suva, though he has a hold rating on the stocks. "We believe the companies still face the same competitive and economic realities." Motorola first announced its plans to split into two companies in March 2008, but was forced to delay this effort as a result of the recession. Last February, the firm confirmed that it was targeting the first quarter of 2011 to complete the separation. --Written by James Rogers in New York. >To follow the writer on Twitter, go to http://twitter.com/jamesjrogers. >To submit a news tip, send an email to: email@example.com.