Motorola Beats on Q4 Earnings, Revs

Zacks

Motorola Solutions Inc. (MSI) reported fourth-quarter 2013 financial results, where both its top and bottom line surpassed the Zacks Consensus Estimate. However, the company slashed its first-quarter 2014 outlook, which impacted the stock price of the company. Consequently, Motorola Solutions is presently trading at $61.55, reflecting a 8.28% dip in the before market trading session.

Quarterly GAAP net income from continuing operations was $343 million or $1.31 per share compared with $336 million or $1.18 per share in the prior-year quarter. Adjusted earnings per share of $1.57 were higher than the Zacks Consensus Estimate of $1.50. Quarterly total revenue was $2,504 million, up 3% year over year and also above the Zacks Consensus Estimate of $2,484 million.

Quarterly gross margin was 48.5% against 50.3% in the prior-year quarter. Operating income, in the reported quarter, was $413 million, down 2% year over year. Quarterly operating margin was 16.5% compared with 17.3% in the prior-year quarter. In the reported quarter, Motorola Solutions repurchased shares worth $362 million.

Motorola Solutions generated $944 million in cash from operations in fourth-quarter 2013 compared with $1,068 million in the year-ago quarter. Quarterly free cash flow was $753 million versus $881 million in the year-ago quarter.

At the end of the fourth quarter of 2013, Motorola Solutions had $3,225 million in cash, cash equivalents and marketable securities compared with $1,468 million at the end of 2012. Total debt, at the end of the reported quarter, was $2,457 million compared with $1,859 million at the end of 2012. The debt-to-capitalization ratio at the end of fourth-quarter 2013 was 0.48 compared with 0.36 at the end of 2012.

Government Segment

Quarterly total revenue was $1,768 million, up 4% year over year. Operating income came in at $332 million, down 4% from the previous year.

Enterprise Segment

Quarterly total revenue was $736 million, flat year over year. Operating income stood at $81 million, up 5% year over year.

Performance by Category

Quarterly Product revenues were $1,776 million, down 0.7% year over year. Services revenues were $728 million, up 11.7% year over year. Quarterly Product gross margin was 53.1% compared with 55.8% in the year-ago quarter. Services gross margin was 37.1% against 35.4% in the comparable year-ago quarter.

Financial Outlook

Motorola Solutions expects revenues for first-quarter 2014 to drop 4 - 6% from first-quarter 2013 while Non-GAAP earnings per share from continuing operations to be in the range of $0.46 to $0.52 per share.

For full-fiscal 2014, Motorola Solutions expects earnings growth to remain flat or increase by 2% as compared with the last fiscal. Non-GAAP earnings per share from continuing operations for fiscal 2014 are expected to be 18.5% of revenues.

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

Other Stocks to Consider

Other stocks worth considering in this sector include Nokia Corp. (NOK), Comtech Telecommunications Corp. (CMTL), and InterDigital, Inc. (IDCC). All three carry a Zacks Rank #2 (Buy).

Read the Full Research Report on MSI
Read the Full Research Report on NOK
Read the Full Research Report on IDCC
Read the Full Research Report on CMTL


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