Motorola Solutions Inc.
) reported excellent financial results for the first quarter of
2012 with both the top line and bottom line exceeding the Zacks
Consensus Estimates. The solid performance was mainly driven by
improved demand across the Government segments.
First-Quarter Results in Details
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. However, adjusted (excluding
special items) EPS in the first quarter of 2012 stood at 53 cents,
ahead of the Zacks Consensus Estimate of 47 cents.
Quarterly total revenue was $1,956 million, up 6.7% year over
year, and marginally above the Zacks Consensus Estimate of $1,918
Quarterly gross margin was 49.7% compared with 50.4% in the
prior-year quarter. Operating income in the reported quarter was
$232 million, up 37.3% year over year. Quarterly operating margin
was 11.9% versus 9.2% in the prior-year quarter. During the first
quarter of 2012, Motorola Solutions repurchased common shares worth
During the quarter, Motorola Solutions generated $69 million in
cash from operations compared with $233 million in the year-ago
quarter. Quarterly free cash flow was a negative $20 million
compared with $206 million in the prior-year quarter.
At the end of first quarter of fiscal 2012, Motorola Solutions
had $3,767 million in cash, cash equivalents and marketable
securities compared with $5,091 million at the end of fiscal 2011.
Total debt at the end of the quarter was $1,126 million compared
with $1,130 million at the end of fiscal 2011.
Debt-to-capitalization ratio at the end of the reported quarter was
0.22 compared with 0.18 at the end of fiscal 2011.
Quarterly total revenue was $1,301 million, up 11% year over
year. Operating income came in at $150 million, up 52% year over
Quarterly total revenue was $655 million, down 2% year over
year. Operating income stood at $82 million, up 17% year over
Performance by Category
Quarterly Product revenue was $1,444 million, up 5.1% year over
year. Services revenue was $512 million, up 11.3% year over year.
Quarterly Product gross margin was 54.4% compared with 54.6% in the
year-ago quarter. Services gross margin was 36.5% compared with
37.8% in the year-ago quarter.
Future Financial Outlook
Motorola Solutions expects second-quarter 2012 revenue to grow
by approximately 6% year over year. EPS from continuing operation
is expected in the range of 65 cents to 70 cents. For fiscal 2012,
revenue is expected to grow 5% year over year and operating income
is estimated to be 17% of total revenue.
Motorola Solutions is market leader in the lucrative U.S. Public
Safety market.The company's business model remains compelling and
we believe that the company will be able to maintain its current
top-line growth going forward, primarily due to the critical nature
of the public safety network in the U.S. and massive growth
potential in the Middle East.
Furthermore, the company has struck a deal with
Verizon Communication Inc.
) to install a standard-based public safety broadband network for
mission-critical operations leveraging on the nationwide LTE
network of Verizon, which we believe will act as a positive
catalyst for the stock going forward. We, thus, maintain our
long-term Neutral recommendation on Motorola Solutions
We maintain our long-term Outperform recommendation onMotorola
SolutionsInc. Currently,Motorola Solutions Inc.has a Zacks #2 Rank,
implying a short-term Buy rating on the stock.
MOTOROLA SOLUTN (
): Free Stock Analysis Report
VERIZON COMM (
): Free Stock Analysis Report
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