Motorola Solutions Inc.
) is slated to release its second quarter 2012 results on
Wednesday, July 25, before the opening bell. The current Zacks
Consensus Estimate for the quarter is pegged at 62 cents,
representing an annualized growth of 9.12%.
With respect to earnings surprises, Motorola Solutions has
outperformed the Zacks Consensus Estimate in each of the past four
quarters. The average earnings surprise is a positive 11.26%,
implying that the company has outdone the Zacks Consensus Estimate
by the same magnitude over the last four quarters.
First Quarter Recap
Quarterly GAAP net income from continuing operation was $159
million or 50 cents per share compared with $367 million or $1.07
per share in the prior-year quarter. Earnings per share of 50 cents
in the first quarter of 2012 were well ahead of the Zacks Consensus
Estimate of 47 cents.
Quarterly total revenue of $1,956 million was up 6.7% year over
year, and marginally above the Zacks Consensus Estimate of $1,918
million. Quarterly gross margin was 49.7% compared with 50.4% in
the prior-year quarter. Quarterly operating margin was 11.9% versus
9.2% in the prior-year quarter.
Agreement of Estimate Revisions
In the last 30 days, none of the five analysts covering the
stock increased or decreased the estimate for the second quarter
and third quarter of 2012. For fiscal 2012 and 2013, none of the 6
analysts covering the stock raised or slashed the EPS estimate.
Magnitude of Estimate Revisions
Due to lack of any estimate revisions, the Zacks Consensus
Estimates for the ongoing quarter and the next quarter of fiscal
2012 has remained stable over the last 30 days, at 62 cents and 69
For fiscal 2012 and 2013, the current Zacks Consensus Estimate
was flat with the earlier estimate of $2.76 and $3.31,
The second and third quarter of 2012 represent a 0.00% and 0.00%
upside potential (essentially a proxy for future earnings
surprises), respectively. Similarly, fiscal 2012 and 2013 reflect a
0.00% and 0.00% upside potentials, respectively.
Huge market share for public safety products and a massive $6
billion of order backlog coupled with a share buyback program of $2
billion through the end of 2012 will certainly boost the top and
bottom line of Motorola Solutions.
However, the company is heavily dependent on Government
expenditures for its revenue. Approximately 65% of total sales of
Motorola Solutions are from government agencies. So we believe that
slowdown in the government expenditures due to budgetary pressures
may significantly jeopardize the company's overall financials.
Sprint Nextel Corp
) plans to gradually phase-out of iDEN network, which is believed
to be a major setback for the company going forward. Thus, we
maintain our long-term Neutral recommendation on Motorola Solutions
Currently, Motorola Solutions Inc. has a Zacks #4 Rank, implying
a short-term Sell rating.
MOTOROLA SOLUTN (MSI): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
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