Motorola (MOT) is damned if it does, damned if it doesn't.

Tuesday, big Motorola customer

Nextel

(NXTL)

got investors thinking. During discussion of its options at the

Banc of America Securities

conference on telecom growth, the super-leveraged brainchild of Craig McCaw talked about how it could build its network. Here's a company that just placed $1.25 billion in debt in January, rejiggered $6 billion in credit in March and is looking to expand its network, as are its fast-growing rivals. Exactly who is going to pay for that? Confident that someone will -- and Motorola is the leading candidate -- Nextel was up $1.61, or 9.34%, to $18.84 in Wednesday trading.

That somebody is not Craig McCaw, despite a Monday press release detailing the wireless maven's support of Nextel. McCaw exercised options to buy 10 million shares, but those were due to expire in July. He had to buy them to keep them from vanishing into thin air, and McCaw hasn't been shy about selling Nextel at around the $20 level in 2001. Not the resounding vote of confidence investors were looking for, and not the cash-raising activity Nextel needs if it's to keep expanding its services.

Nextel said one way it could foot the bill for a pricey build would be through vendor financing. What a fascinating thought.

Lucent

(LU)

, Motorola and others have buckled under doubts about their customers' ability to pay for equipment given to them on credit. Many of those now-hapless wireless companies looked as if they'd be able to pay their bills when they signed on the dotted line. These days Nextel looks as if it can't pay a parking ticket -- OK, so it had $4.82 billion in cash and short-term investments at the end of the first quarter, but at the same time it acknowledged that operating cash flow couldn't keep up with interest payments of $358 million due in the quarter.

Motorola is the likely candidate, given that it owns 14% of Nextel already and that Nextel is a lucrative technology customer of Motorola's -- make that the only customer of Motorola's integrated Digital Enhanced Network proprietary wireless network equipment. Motorola gets to sell lots of handsets to Nextel customers, on top of Nextel's equipment buys. Motorola can't afford to slip much further in the handset market, which makes Nextel a key customer. Motorola already extended $57 million in vendor financing to Nextel International for the purchase of Motorola goods.

"Motorola kind of has to keep them in the game," says Todd Bernier of

Morningstar

. "If they don't and Nextel moves to a CDMA

code division multiple access handset, a lot of makers make CDMA handsets." Bernier says Nextel will get its vendor financing because its "balance sheet isn't the wreck its competitors' are." Even considering Motorola's current earnings troubles, financing support of Nextel is not "entirely unfeasible," according to Bernier.

At B of A, Nextel played coy and agreed that it could investigate contracts in CDMA 2000 technology, an ambitious upgrade from the Motorola system it runs to faster, more standard systems. A Nextel move to CDMA would open Nextel up to the wonders of price competition in a lineup filled with CDMA sellers and a faster pace of technology development. "That's exactly part of the problem with Motorola," explains

Jefferies

analyst Ben Abramovitz. "If Nextel stays with its current technology, iDEN, it's a Motorola technology. Motorola doesn't have the excess funds to pour into R&D to help Nextel move along with compression technology, etc." Just another reason why Motorola needs to make itself attractive.

Motorola might just have little choice but to embroil itself in more scandalous vendor financing -- just as its Turkish telecom partner

scrambles to pay up on $728 million it owes on a $2 billion total bill -- to keep Nextel on its roster. Perfect timing and a perfect bind on Nextel's part.