Moto's Cable Unit: Breaking Free From Mobile Phones

Motorola is said to be shopping around its Home & Networks Mobility division, asking for upwards of $5 billion (see Goodbye Moto?).

That potential move, first reported by the Wall Street Journal, may be a better outcome for the Home & Networks Mobility, which includes the cable equipment businesses, than under Moto’s scenario of splitting into two.

The company reiterated yesterday that it remains “committed” to the plan to divide into two — Mobile Devices, and everything else. But according to an analysis by the Journal last year, that would leave one group holding the bag on a massive debt load (Motorola Split to Put One Entity In the ‘Poorhouse’?).

The win-win scenario of selling Home & Networks Mobility, on the other hand, is that it would help Motorola pay down its $3.9 billion in long-term debt and therefore put the handset business on a firmer footing, according to UBS analyst Maynard Um (as cited by the NYT).

The Home & Networks Mobility business clearly is attractive. The Journal says the unit’s operating earnings of $199 million (9.9% operating margin) in the third quarter is apparently what prompted private-equity firms TPG and Silver Lake Partners to approach Motorola about buying it.

Sure, Motorola’s cable set-top sales are down YTD because of the recession. And there’s some uncertainty about whether Motorola can successfully build a 4G business in the long-term (though it claims its WiMax sales will be $600 million in 2009).

But I’d rather place the relatively safe bet that more HD DVRs, VOD, fiber, WiMax, etc. are going to be deployed by providers around the world, rather than crossing my fingers that the Droid will become a smash hit.