What's next for Motorola?

The potential break up of Motorola Inc. could have a heavy price tag for workers, customers, service providers and even the local economy, experts said Friday.

While Motorola may gain internally, the external ripple could be great.

Rumors have been rampant on Wall Street for about a year, and Motorola finally said Thursday it will consider strategic options for its floundering Mobile Devices business, which includes selling it.

"The near term appreciation in the stock on the news of the sale will be short-lived if a suitor isn't named soon," said Edward Snyder, analyst with Charter Equity Research.

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Motorola's bottom line has been bleeding. Its mobile phone business has lost worldwide market share, dropping to a distant No. 3 against arch-rival Nokia. Restructuring continues as it lays off workers and searches for that next golden phone to match the popularity of its ultra-thin Razr.

The company's Mobile Devices business lost roughly 33 percent in sales last year. The cost of delaying action any further could be costly.

Here's a sampling of the costs of a breakup:

Q. What could the mobile phone business sell for?

A. Some analysts said it likely would be in the "billions of dollars." Mark McKechnie, analyst with American Technology Research, estimated $8 billion to $10 billion.

"Our view factors the challenges ahead for the handset business, potential disruptions before and after a sale, the unlikelihood of transferring the Motorola brand, and the large required investment ahead that would limit the value to a fraction of sales," McKechnie said.

Q. Who would buy it?

A. A smaller handset manufacturer, such as Sony-Ericsson, could be a likely buyer as it seeks to boost its product portfolio and market share, analysts said.

"Motorola's portfolio would diversify what Sony-Ericsson has," said Snyder. "Samsung and LG are already established in the U.S. and there would be too much redundancy, but they could gain sales at Motorola's expense."

Nokia would be excluded due to anti-trust concerns from the European Union, analysts said. Also, private equity firms would unlikely buy it because they would have to invest too much to fix the business to make it profitable, said Rick Franklin, analyst with Edward Jones.

Q. What's the cost to Libertyville, where Mobile Devices is headquartered, and the local economy?

A. The Libertyville center -- with about 1 million square feet -- once employed about 3,500. Motorola closed the manufacturing portion there when the company built a new facility in Harvard, which also later folded. The center is used for research and development and as a warehouse for distribution.

Motorola owns 83 acres at the site, 600 Route 45, according to tax records. The fair market value is $45.7 million, according to the most recent tax bill.

For tax year 2006 payable in 2007, Motorola paid $868,287. From 1999 to 2005, Motorola paid about $9 million in property taxes.

Q. What's the cost to workers?

A. "Attrition would speed up (at Libertyville)," said Snyder. "Even if another handset company bought the business, there would be a lot of redundancy and that leads to layoffs."

Defections and layoffs were already running high before the "for-sale" sign went up, Snyder said.

In the meantime, production could suffer. "Motivation would disappear," he said.

The Libertyville center has about 200 employees, according to the village's last statement in July 2006, which is required for bond issues. That puts it in the top 10 of major Libertyville employers.

Q. Cost to consumers?

A. While the business is being shopped around, the design and production of handsets could suffer, leading to a lack of interest from potential buyers, analysts said.

In addition, consumers likely would be concerned about the longevity of their manufacturer's guarantees or warranties. But very often new owners will absorb those contracts, analysts said.

Q. What's the cost to service providers?

A. Analysts said consumers likely would be skittish about continuing to buy Motorola phones and devices at local stores. Questions remain if guarantees/warranties would be honored or if phones or parts could be repaired or replaced, experts said.

Verizon Wireless and Sprint declined comment. Others didn't respond.

"Motorola must act fast with its evaluation as the 'overhang' will likely cause incremental handset business disruptions, including employee defections, reduced supplier support, and strained carrier relations," McKechnie said.