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Motorola’s $30 billion question

By Stephanie Mehta

A visitor on Thursday pointed out a startling fact that provides some interesting context to the news of Ed Zander’s unsurprising departure from Motorola (MOT). Motorola, which makes dozens and dozens of models of cellphones, equipment for cable operators and public-safety equipment — and last year had sales north of $43 billion — has a market capitalization today of about $35 billion. Research In Motion, (RIMM) which basically makes a handful of BlackBerry e-mail devices and smartphones, boasts a market value of $65 billion. The Motorola board probably wasn’t too happy with that $30 billion difference.

To be sure, RIM is more than a phone maker: it is as much a software company that controls an incredibly popular, proprietary operating system for wireless. The company gets high marks from many users, who can’t live without their BlackBerries, and from some CEOs, who admire its ability to stay ahead of the curve. Comcast (CMCSA) CEO Brian Roberts, recently told me: “I give BlackBerry tremendous credit for continually reinventing itself. It just added GPS and voice-activated navigation. Telephony wasn’t even a feature several years ago, now (my BlackBerry) is the principal cell phone for me.”

So how does Motorola, under new CEO Greg Brown, capture some of the RIM magic? It won’t be easy: Motorola has long positioned itself as all things to all users: It makes phones for first-time users in developing countries. It makes devices, such as a Dolce & Gabbana RAZR released a few years back, aimed at luxury buyers. And it tries to serve everyone in between. RIM addresses just the high end of the market.

Perhaps it is more appropriate to compare Motorola to rival Nokia (NOK), which also makes devices for every type of consumer worldwide. Then again, Nokia, which has managed to maintain its No. 1 position in mobile devices (a position it grabbed from Motorola in 1998), has been on a tear lately: The stock has basically doubled this year, and so Nokia now boasts a whopping $157 billion market cap. Does that mean Motorola actually has to answer the $122 billion question?