Motorola shares surged nearly 4 percent this morning on speculation the company may be selling its networks equipment unit to competitor Nokia Siemens.

The Wall Street Journal reported late Tuesday that Nokia Siemens and Motorola are in talks for the Schaumburg-based company’s networks business, which makes infrastructure and equipment for wireless operators.

Motorola is planning to spin off its mobile phone and television set-top box units into an independent, publicly traded company called Motorola Mobility in the first quarter of 2011.

The remaining company, to be called Motorola Solutions, would consist of the networks business and enterprise mobility solutions, the unit that makes communications gear for public safety agencies and industrial clients. If Motorola were to divest its networks division, Motorola Solutions would be left with just enterprise mobility.

The fate of the networks business has been the subject of industry speculation for some time, as the unit lacks the scale of larger rivals such as Nokia Siemens and Huawei.

Networks continues to be profitable despite year-on-year declines in sales. The division posted net earnings of $366 million in 2009. Sales totaled $4.1 billion, compared with $5.2 billion in 2008.

But Motorola Co-Chief Executive Greg Brown, who oversees networks and enterprise mobility, has said that the objective with the networks unit is to manage it for cash and earnings. In Motorola’s latest earnings conference call, Brown said he expected the business to post a year-on-year sales decline of about 10 percent in 2010.

When asked by an analyst whether the networks business might consider participating in industry consolidation, Brown said he and co-CEO Sanjay Jha “continually” evaluate “alternative structures” but are committed to following through with the separation.

Motorola has “cited strategic flexibility to make acquisitions as one of the rationales behind the separation,” CreditSights analyst Ping Zhao wrote in a recent research report. “We believe that it is very likely that Motorola Solutions, following the separation, will indeed pursue acquisitions and divestures to reshape the company.”

Sales for enterprise mobility solutions have handily outpaced those at the networks business for years. In 2009, enterprise mobility posted sales of $7 billion and net earnings of $714 million, making it the best-performing unit at Motorola.

The company has been pushing ahead with new generations of public safety equipment, hoping that government agencies will invest in emerging technology such as advanced video surveillance and ruggedized handheld computers for law enforcement officials.
Enterprise mobility also focuses on barcode scanners other types of communications gear for industries such as logistics, transportation and retail.