Motorola Mobility Holdings, Inc. (NYSE:MMI.DL)

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Player Avatar TMFDeej (99.40) Submitted: 5/29/2011 10:23:43 PM : Outperform Start Price: $24.73 MMI.DL Score: +66.10

According to Goldman, MMI is cheap on a sum-of-the-parts basis. It currently trades at just under $25/share and has:- $8 per share in deferred tax assets- $11 per share in cash- $3 to $4 per share for set-top box business. This adds up to $22 to $23/share, meaning that investors are essentially getting the company's handset business for free.Deej

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Member Avatar divagator (< 20) Submitted: 5/31/2011 2:26:41 PM
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The low valuation is summed up well by Morningstar:

"...we continue to believe the plentiful selection of substitute products available to consumers and the strong bargaining power of the wireless carriers will make it difficult for Motorola Mobility to earn much more than its cost of capital over the long term."

There's always the possibility of a break-out hit, but absent that, it's hard to see where the earnings are going to come from given the handset competition, the plateauing of the marketplace for handsets, and the shrinking market for cable set-top boxes (which I think MMI has after the spin-off).

Member Avatar ikkyu2 (99.31) Submitted: 7/14/2011 8:50:27 PM
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Well, the tax assets are only any good if they can offset them against income taxes incurred, right? If they can't get any income, those assets disappear.

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