Motorola Beats Q3 Earnings, Lags Rev - Analyst Blog


Motorola Solutions Inc. ( MSI ) reported mixed financial results for the third quarter of 2013, where the company's bottom line surpassed the Zacks Consensus Estimate but the top line missed the same.

Quarterly GAAP net income from continuing operations was $307 million or $1.16 per share compared with $206 million or 72 cents per share in the prior-year quarter. Adjusted earnings per share of $1.32 were significantly higher than the Zacks Consensus Estimate of 92 cents. However, quarterly total revenue was $2,112 million, down 1.9% year over year and also below the Zacks Consensus Estimate of $2,128 million.

Quarterly gross margin was 49.4% against 50.5% in the prior-year quarter. Operating income, in the reported quarter, was $320 million, down 1.2% year over year. Quarterly operating margin was 15.2% compared with 15% in the prior-year quarter. In the reported quarter, Motorola Solutions repurchased shares worth $425 million.

Motorola Solutions generated $152 million in cash from operations in third-quarter 2013 compared with $182 million in the year-ago quarter. Quarterly free cash flow was $116 million versus $143 million in the year-ago quarter.

At the end of the third quarter of 2013, Motorola Solutions had $2,890 million in cash, cash equivalents and marketable securities compared with $3,603 million at the end of 2012. Total debt, at the end of the reported quarter, was $2,458 million compared with $1,859 million at the end of 2012. The debt-to-capitalization ratio at the end of third -quarter 2013 was 0.48 compared with 0.36 at the end of 2012.

Government Segment

Quarterly total revenue was $1,465 million, down 4% year over year. Operating income came in at $252 million, down 8% from the previous year.

Enterprise Segment

Quarterly total revenue was $647 million, up 2% year over year. Operating income stood at $68 million, down 33% year over year.

Performance by Category

Quarterly Product revenues were $1,482 million, down 5.4% year over year. Services revenues were $630 million, up 7.5% year over year. Quarterly Product gross margin was 54.5% compared with 56.5% in the year-ago quarter. Services gross margin was 37.3% against 34.5% in the comparable year-ago quarter.

Financial Outlook

Motorola Solutions expects revenues for full fiscal 2013 to remain flat with the last fiscal. Non-GAAP earnings per share from continuing operations for fiscal 2013 are expected in the range of $4.63 to $4.70, while Non-GAAP operating income is expected to be 18% of the total revenue.

Motorola Solutions currently has a Zacks Rank #3 (Hold).

Other Stocks to Consider

Other stocks worth considering in this sector include Ericsson ( ERIC ), Harris Corp. ( HRS ) and Novatel Wireless Inc. ( NVTL ). All three carry a Zacks Rank #2 (Buy).

ERICSSON LM ADR (ERIC): Free Stock Analysis Report

HARRIS CORP (HRS): Free Stock Analysis Report

MOTOROLA SOLUTN (MSI): Free Stock Analysis Report

NOVATEL WIRELES (NVTL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ERIC , HRS , MSI , NVTL

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