2nd UPDATE: Motorola Spinoff Companies Begin Trading

As Motorola Inc. (MOT) preps for a formal split early next year, the "when-issued" shares of its spinoff companies opened for trading Friday.

Motorola Mobility Holdings Inc. (MMI), the company's smartphone division, opened at $27.50, then fell 9.1% to $25. Motorola Solutions Inc. (MSI), the business that makes public safety radios, handheld scanners and telecommunications network gear, opened at $39.25 and rose 3.2% to $40.51 in recent trading.

The market capitalization for Motorola Mobility is about $7.4 billion, while the market capitalization for Motorola Solutions is about $13.7 billion at current market prices.

On Jan. 4, Motorola shares will cease trading under the MOT ticker. Until then, Motorola Mobility will trade under the ticker MMI.WI, and Motorola Solutions will trade under the ticker MSI.WI. "When-issued" trading allows market participants to seek out the market value for spinoff stocks ahead of the official split.

Motorola shares traded down two cents at $8.87 after the stock climbed to its highest level in over a year, $8.95, during Thursday's session.

Shareholders of record as of Dec. 21 will receive one share of Motorola Mobility for every eight shares owned. The company will then carry out a reverse split, where one share Motorola Solutions stock will be issued for every seven shares of old Motorola stock.

A spokesman for Motorola did not immediately comment.

Susquehanna Bancshares Inc. analyst Jeffrey Fidacaro said the current price for Motorola Solutions is roughly in line with his expectations. Fidacaro published a report earlier this week that estimated the fair value for the stock, or the expected trading level a year from now, at about $38 per share.

Shares of the smartphone arm are trading at the conservative side of his estimates, however. Fidacaro forecasted Motorola Mobility shares would be fairly valued around $35 per share in the report.

But Fidacaro said it is still too early to gauge what investor demand will be for Motorola Mobility shares, noting that trading activity seemed to perk up once the stock fell to $25 per share.

The telecom-equipment maker has been preparing for the split since early 2008, when the company agreed to spin off its handset business after pressure from activist investor Carl Icahn.

--By Chris Dieterich, Dow Jones Newswires; 212-416-2611; [e-mail]