Before the opening bell, Motorola Solutions
Inc. ( MSI
) reported weaker results for the first quarter of 2013, with both
the top and the bottom lines missing the Zacks Consensus Estimate.
The company has also reduced its revenue outlook due to sluggish
growth in the Government segment.
Fourth-Quarter Results in Details
Quarterly GAAP net income from continuing operations was $192
million or 68 cents per share compared with $159 million or 50
cents per share in the prior-year quarter.
Adjusted EPS of 55 cents in the quarter was just below the Zacks
Consensus Estimate of 56 cents. Quarterly total revenue was $1,973
million, up 1% year over year, but was below the Zacks Consensus
Estimate of $2,055 million.
Quarterly gross margin was 48.4% compared with 49.7% in the
prior-year quarter. Operating income in the reported quarter was
$216 million, down by 6.9% year over year. Quarterly operating
margin was 10.9% versus 11.9% in the prior-year quarter. During the
first quarter of 2013, Motorola Solutions repurchased shares worth
During the quarter, Motorola Solutions generated negative $31
million in cash from operations compared with $69 million in the
year-ago quarter. Quarterly free cash flow (operating cash flow
less capital expenditure) was negative $77 million compared with a
$20 million in the prior-year quarter.
At the end of the first quarter of fiscal 2013, Motorola
Solutions had $3,718 million in cash, cash equivalents and
marketable securities against $3,603 million at the end of fiscal
2012. Total debt at the end of the quarter was $2,450 million
compared with $1,859 million at the end of fiscal 2012.
Debt-to-capitalization ratio at the end of the reported quarter was
0.44 compared with 0.36 at the end of fiscal 2012.
Quarterly total revenue was $1,346 million, up 3% year over
year. Operating income came in at $180 million, up 20% year over
Quarterly total revenue was $627 million, down 4% year over
year. Operating income stood at $36 million, down 56% year over
Performance by Category
Quarterly product revenues were $1,381 million, down 4.4% year
over year. Services revenues were $592 million, up 15.6% year over
year. Quarterly product gross margin was 52.9% compared with 54.4%
in the year-ago quarter. Services gross margin was 38% compared
with 36.5% in the year-ago quarter.
Future Financial Outlook
Motorola Solutions expects the second quarter of 2013 revenues
to remain the same or fall by 2% year over year. EPS from
continuing operations is expected in the range of 66 cents to 71
For fiscal 2013, revenue is expected to grow by 3% to 4% year
over year while Non-GAAP operating income is expected to be 18% of
the total revenue.
Other Stocks Set for Earnings Release
Some other companies in the same sector, which are about to
release their financial results are Qualcomm Inc.
( QCOM ) and
Harris Corporation (HRS).
Qualcomm will report its second-quarter 2013 results on Apr
24 while Harris will release its third-quarter 2013 results on Apr
We believe that huge market share for public safety products,
recent acquisitions and continuous order wins will consistently
drive both the top and the bottom lines of the company, going
However, the company is heavily dependent on government
expenditures for its revenues. Approximately 65% of the total sales
of Motorola Solutions are from government agencies. Therefore, we
believe that a slowdown in the government expenditures owing to
budgetary pressures may significantly jeopardize the company's
overall financials; hence the company has also slashed its future
growth outlook. Moreover, Sprint Nextel Corp . (
S ) has planned to
gradually phase out of iDEN network, which may act as a major
setback for the company going forward.
Currently,Motorola SolutionsInc.has a Zacks Rank #2 (Buy).HARRIS CORP (HRS): Free Stock Analysis ReportMOTOROLA SOLUTN (MSI): Free Stock Analysis
ReportQUALCOMM INC (QCOM): Free Stock Analysis ReportSPRINT NEXTEL (S): Free Stock Analysis ReportTo read this article on Zacks.com click here.