Motorola Solutions Inc.
) reported disappointing financial results for the second quarter
of 2014, wherein both its top and bottom line significantly missed
the respective Zacks Consensus Estimate. On Apr 15, 2014, Motorola
Solutions entered into an agreement with Zebra Technologies Corp. (
) to sell its Enterprise Business for $3.5 billion in cash. The
deal is expected to close by the end of 2014.
Quarterly GAAP net income from continuing operations came in at
$78 million or 30 cents per share compared with $227 million or 81
cents per share in the prior-year quarter. Adjusted earnings per
share of 40 cents were well below the Zacks Consensus Estimate of
52 cents per share.
Motorola Solutions, Inc - Earnings Surprise |
Quarterly total revenue was $1,393 million, down 7% year over
year and also missed the Zacks Consensus Estimate of $1,959
million. Reduction in sales was primarily due to poor demand in
North America, Asia Pacific and the Middle East, partially offset
by an increase in demand in Europe, Africa and Latin America.
Quarterly gross margin stood at 47.1% against 50.1% in the
prior-year quarter. Operating income, in the reported quarter, was
$138 million, down 32% year over year. Quarterly operating margin
was 9.9% compared with 13.6% in the prior-year quarter. In the
reported quarter, Motorola Solutions repurchased shares worth $416
On Jul 31, 2014, Motorola Solutions announced an increase in its
quarterly cash dividend by 10% to 34 cents per share. The next
quarterly dividend will be payable in cash on Oct 15, 2014, to
stockholders of record at the close of business as on Sep. 15,
Motorola Solutions generated $118 million in cash from
operations in second-quarter 2014 compared with a negative $22
million in the year-ago quarter. Quarterly free cash flow was $76
million as against a negative $59 million in the year-ago
At the end of the second quarter of 2014, Motorola Solutions had
$2,876 million in cash and cash equivalents compared with $3,225
million at the end of 2013. Total debt, at the end of the reported
quarter, stood at $2,450 million as against $2,457 million at the
end of 2013. The debt-to-capitalization ratio at the end of
second-quarter 2014 was 0.37 compared with 0.48 at the end of
Segment Wise Results
Quarterly Product revenues totaled $887 million, down 10% year
over year. Services revenues were $506 million, down 1% year over
year. Quarterly Product operating margin was 10.7% compared with
12.7% in the year-ago quarter. Services operating margin was 8.5%
as against 15.3% in the comparable year-ago quarter.
Motorola Solutions expects revenues for third quarter of fiscal
2014 to drop 7% - 9% year over year while non-GAAP earnings per
share from continuing operations are likely to be in the range of
35 cents to 41 cents.
For full-fiscal 2014, Motorola Solutions expects revenues to
decline by low-to-mid single digits year over year while non-GAAP
operating margin from continuing operations is estimated to be
Other Stocks to Consider
Motorola Solutions currently has a Zacks Rank #3 (Hold). Other
better-ranked stocks worth considering in the wireless equipment
sector include DragonWave Inc. (
) and Ericsson (
). Both these stocks currently carry a Zacks Rank #2 (Buy).
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