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By some estimates the handset business that Motorola (MOT) plans to spin-out to shareholders next year has no value at all. If the parent company puts some cash in the handset firm’s bank account as it goes out the door that capital may be all it has to justify a positive market cap.

Concerns about Motorola’s weakest unit got more acute today. Its largest rival, Nokia (NOK), turned in some tough figures for the third quarter. The world’s largest handset company had a 30% drop in earnings on a 5% drop in revenue.

For the period, Nokia sold 118 million units, down from 122 million in Q2. Since the Finnish company has 38% of the global market, its latest numbers are telling.

Tech research firm Gartner recently cut its estimates for worldwide handset sales growth this year from over 10% to 8%. According to Reuters, "Mobile phone sales will grow slower this year than previously estimated as economic turmoil hits demand in Europe and Asia-Pacific regions."

In the June quarter, Motorola made on $5 million on $8.1 billion in sales. Revenue in its mobile device business fell 22% to $3.33 billion. The division lost $346 million. The firm only shipped 28.1 million handsets in the period down from 35.5 million in the same quarter the year before.

Based on Nokia’s figures, it is entirely possible that Motorola’s numbers in Q3 were awful. With its earnings coming up, Wall St. will know for certain.

Motorola has a market cap of under $12 billion which is only .35x annual sales. It has two successful businesses in telecom enterprise solutions and home networking. Both make money.

Does Motorola have anything of value to hand shareholders when it gives them the handset operation?

Probably not.

Douglas A. McIntyre