Motorola Solutions posted dismal second-quarter 2014 financial
results with both the top and the bottom line missing the Zacks
Consensus Estimate. Also, the company continues to face a downtrend
in demand across different geographic regions. Moreover, lower
contract wins and sluggish economic trends have forced the company
to slash its outlook and divest its Enterprise Business segment.
Further, declining profit has compelled Motorola Solutions to raise
its cost-cutting target. Moreover, phasing out of the iDEN network
will act as a headwind for the company going ahead. In our view,
Motorola Solutions is currently overvalued as it is trading at the
high end of the 52-week price range. We do not see any immediate
growth catalyst for the company. We thus, maintain our long-term
Underperform recommendation on Motorola Solutions.
Motorola Solutions Inc. (MSI), based in Schaumburg, IL, is a
leading communications equipment manufacturer, and has strong
market positions in bar code scanning, wireless infrastructure
gear, and government communications. The company was formed
following the split-off from its parent company Motorola Inc. on
Jan 4, 2011. Motorola Solutions generally provides services and
solutions to the government segments and public safety programs
together with large enterprises and wireless infrastructure service
providers. It develops and services both analog and digital two-way
radio, voice & data communications products and systems for
private networks, wireless broadband systems and end-to-end
enterprise mobility solutions to a wide range of enterprise
markets. It also provides customized, fully integrated
communication and information systems for mission-critical
customers including government and public safety agencies.
Motorola Solutions reports in two segments:
Government Segment: This segment includes sales from two-way
radios and public safety systems. Service revenues in the
government segment are related to designing, installation,
maintenance and optimization of equipment for public safety
networks. The segment accounted for nearly 69.3% of the company's
total revenue in fiscal 2013, primarily generated from the sale of
public safety products to various state governments.
Enterprise Segment: This segment includes sales of enterprise
mobile computing devices, scanning devices, wireless broadband
system 1.4, RFID data capture solutions and iDEN infrastructure.
Service revenues in the Enterprise segment are primarily derived
from maintenance contracts associated with the above-mentioned
products. The segment accounted for the remaining 30.7% of the
company's total revenue in fiscal 2013, which came from the sale of
products following the acquisition of Symbol Technologies.
Motorola Solutions Inc. (MSI): Read the Full
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