Motorola Inc's planned split into two may provide a windfall for investors who are brave enough to make a risky bet and patient enough to wait months for benefits from the transaction to materialize.

In the planning stages for much of this year, next month's separation will finally result in the creation of two companies: Motorola Mobility, the cellphone and TV set-top box business; and Motorola Solutions, which sells gear like walkie-talkies to corporate and government clients.

Some investors, including billionaire activist Carl Icahn, have long pushed for just such a separation, as they want the chance to choose between Motorola Mobility's fast-growing but volatile business and Motorola Solution's steadier but slower-growth business.

Indicating his confidence in the company's plan, Icahn has doubled his stake in Motorola to more than 11 percent this year. Others seem just as sanguine. Motorola shares were up 4.5 percent on Thursday ahead of the kick of early trade in the new stocks on a when issued basis. Shares start to change hands after the actual split.

Analysts say the new entities may be worth 13 percent more than Motorola's current market value as a single company. One analyst, Alkesh Shah of Evercore Partners, figures the sum of the two parts may rise above $10 a share, compared with a current Motorola stock price of $8.80 a share.

I think this is a good long term investment with the first positive catalyst being the spin, said Shah. A subsidiary of his firm, Evercore Trust Co, was a holder of 1.33 percent of Motorola shares September 30.

Right now investors who wanted Solutions would shy away from Motorola because of handsets, which is more volatile, he added.

After the split, investors will put a higher value on the cellphone unit, which is valued today at about $3.80 per share, according to Avian Securities analyst Matthew Thornton who views $9.50 as a fairer value for the combined business.

My sense is that Mobility is somewhat undervalued, said Thornton, who bases his price target on an expectation for 2011 revenue growth of as much as 24 percent in the phone business, compared with 5 percent growth at Motorola Solutions.

BALANCING RISK VS GROWTH

Shares in separated firms often fall in the weeks after a split as investors tweak holdings to suit their strategy, said Josef Schuster, founder of IPOX Schuster, a Chicago firm.

But typically, shares in the parent and new entity rebound and turn positive in the first 12 to 18 months, Schuster said.

We definitely will consider Motorola as an addition to our portfolio, said Schuster, who manages an IPO/Spin-off fund.

Out of 34 global spin-offs in the first 11 months of 2010, shares in 23 of the companies rose, returning an average of 20 percent growth for investors, said Ryan Mendy, Chief Operating Officer of UK research firm The Spinoff Report. For 1,200 spin-offs his firm researched between 1998 and 2008, shares in the parent and new entity rose up to 15 percent in a year.

But results vary hugely. Mendy cited Carphone Warehouse as this year's best performer as its shares more than doubled since it spun off a unit in March. Cable & Wireless put on the worst performance, with shares losing a third of their value.

A big risk with Motorola is increasing competition faced by its cellphone business, which recently posted a quarterly profit after years of losses due to a lack of hit phones.

Wall Street has praised CO-Chief Executive Sanjay Jha for reviving that unit by focusing on smartphones, the top mobile growth segment, using popular Google Inc software.

In the same quarter as the split, Jha may face his biggest adversary yet as Apple Inc is seen launching iPhone sales at Verizon Wireless, Motorola's biggest customer.

Avian's Thornton sees a Verizon iPhone as a temporary blip for Motorola, which should gain ground later in 2011 at T-Mobile USA and AT&T Inc, currently the exclusive U.S. iPhone carrier.

Indeed, Evercore's Shah expects AT&T to use Motorola to fight Verizon with a major marketing push for a new Motorola phone early 2011.

Among those who see competitive concerns as a bigger factor for Motorola investors than the split is Lawrence Hrebiniak, associate management professor at the University of Pennsylvania.

It works occasionally and sometimes it doesn't, he said. The increase in value won't come magically from the split. It takes a lot of work.

(Reporting by Sinead Carew; editing by Paul Thomasch and Matthew Lewis)

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