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Motorola (MSI) Infrastructure to Power Xcel Energy Network

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Motorola Solutions Inc. MSI recently inked an agreement with Xcel Energy Inc. XEL for an undisclosed amount to deploy critical infrastructure solutions in Minneapolis for setting up a private wireless broadband network in the 900 MHz band. The wireless network, developed in collaboration with Anterix Inc. ATEX, will enable the utility firm to promptly respond to local electric outages.

In addition to a pro-active response, the network is likely to support the advanced features of ‘smart meters’ for better utilization of resources by providing customers key insights into their energy consumption patterns. Furthermore, it will provide cyber protection against potential cyber threats and sow the seeds for technology automation of utility services across remote locations.

Notably, in May 2020, the Federal Communications Commission made the 900MHz available to utility firms for the deployment of broadband services and technologies in order to maintain critical infrastructure facilities. The opening up of the under-utilized spectrum helped the utility sector to leverage private LTE broadband networks for grid modernization. Moreover, it enabled 900 MHz licensees to operate narrowband conventional or trunked networks that support two-way voice and data communications, providing additional operational flexibility.      

Xcel Energy will utilize Motorola’s LXN 7900 fixed LTE 900 MHz infrastructure and MOTOTRBO Nitro broadband network to set up the private Land Mobile Radio (LMR) communication network. Equipped with a high adjacent channel power ratio, private broadband LMR solution offers best-in-class broadband data capabilities across voice, IoT and video platforms. This, in turn, streamlines the critical wide area communications with reduced intrusion of neighboring narrow-band license holders and improved network performance.

Riding on such technology collaborations, Motorola is likely to rake in a steady stream of recurring revenues. As one of the leading providers of mission-critical communication products and services, the company intends to fortify its position in the public safety domain by entering into alliances with other players in the ecosystem. It remains poised to benefit from organic growth and acquisition initiatives, disciplined capital deployment and favorable global macroeconomic environment.

Moving forward, the company expects to witness strong demand across LMR products, services and software. These systems drive demand for additional device sales, and promote software upgrades and infrastructure expansion. The comprehensive suite of services ensures continuity and reduces risks related to critical communications operations. Its competitive position, healthy balance sheet and an attractive portfolio for large addressable market augur well for growth.

However, currency translation headwinds remain a perennial concern as Motorola generates significant revenues outside the United States. The global coronavirus pandemic is further likely to dent its overall demand as the world grapples with an adverse economic effect. Management expects year-over-year revenues to decline in 2021 as the virus outbreak continues to impact its professional commercial radio business and delay engagement and deployments in certain cases, likely affecting its revenue trend.

Shares of the company have lost 1.4% in the past year against the industry’s growth of 35.2%.



Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. A better-ranked stock in the industry is Qualcomm Incorporated QCOM, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1(Strong Buy)stocks here.

Qualcomm has a long-term earnings growth expectation of 19.6%. It delivered a positive earnings surprise of 17.3% in the trailing four quarters, on average, beating estimates thrice.

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Xcel Energy Inc. (XEL) : Free Stock Analysis Report
 
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pdvWireless, Inc. (ATEX) : Free Stock Analysis Report
 
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