A very bleak look at the financials behind Motorola’s decision to hive off its mobile division. According to the WSJ, the handset division is losing so much money that spinning it off could put “one or other of the newly independent firms in the poorhouse.” The money issue is even hampering its efforts to hire a new CEO for the handset unit. Front runner Todd Bradley—currently EVP of HP’s Personal Systems group—has backed out, apparently balking over the dangerous levels of cash.

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The mobile unit will need $4 billion to support itself for two years as an independent company—that’s if it can stop bleeding cash now. The WSJ works out that this is half of what the company’s cash balance is slated to be at the end of 2008. At the end of March, it had $7.7 billion in cash, and $4.2 billion in debt. If the handset unit sucks up $4 billion to make it a go, Moto’s other business, the enterprise and mobility group—would most likely be left with the remaining cash and debt.

Such a move would put pressure on its credit rating, which would most likely be downgraded to “junk,” with a knock on effect on its cost of borrowing. The enterprise and mobility group’s profitability could also be hurt as the two units share factories, IT systems and procurement. Separating the two could cost as high as $750 million. Plus, as the mobile unit supported two-thirds of the corporate overhead, the break-up means cutting costs to make up for the lost savings.

If the new mobile company doesn’t walk away with the cash, it will have to find funding elsewhere—perhaps through private equity, a strategic partner, or through convertible shares. But those options don’t look very easy to secure.