360° Coverage : Motorola Solutions Earnings To Benefit From Government...

2 Updates
Motorola Solutions Earnings To Benefit From Government Seasonality And Steady Enterprise Recovery

Motorola Solutions Earnings To Benefit From Government Seasonality And Steady Enterprise Recovery

Jan 21 2014, 2:24pm CST | by

Motorola Solutions is scheduled to announce its Q4 earnings on January 22. The company has decreased its 2013 revenue guidance three times already, and will enter this earnings call with flat...

Filed under: news


38 weeks ago

Motorola Solutions Earnings To Benefit From Government Seasonality And Steady Enterprise Recovery

Jan 21 2014, 2:24pm CST | by

Motorola Solutions is scheduled to announce its Q4 earnings on January 22. The company has decreased its 2013 revenue guidance three times already, and will enter this earnings call with flat revenue growth expectations set for the full year – down from 3-4% set in April. Most of the recent weakness in top-line growth was due to the government shutdown in the U.S., which hit federal spending and caused Motorola to reduce its full-year revenue forecast by about $100 million. Moreover, since most of this shortfall isn’t deferred, it is unlikely that Motorola will realize any of these lost revenues in the coming quarters. However, the company’s Q4 results are likely to have benefited from traditional fourth-quarter seasonality in its government business, which accounts for almost 70% of its total revenues.

The enterprise side of Motorola’s business has been reeling under the impact of macroeconomic uncertainty, which has caused customers to defer their spending or break their bigger orders into smaller ones. However, while enterprise sales continue to be weak, the segment showed signs of improvement in Q3 when it recorded its first year-over-year growth in several quarters. Revenues from enterprise customers increased 2% over the year-ago quarter – most of which was, however, due to the Psion acquisition which was completed in Q4 last year. Excluding Psion, enterprise sales declined 5% year over year, but that was still an improvement over the 12% year-on-year declines seen in the preceding quarters. To deal with the uncertain macro-environment, Motorola has been looking to improve margins by reducing costs and driving efficiency through operations. As a result, the company expects to improve 2013 operating margins by 70 basis points over the previous year.

See our complete analysis for Motorola Solutions here

Government Business To Return To Growth In 2014

A big reason for Motorola’s lackluster top-line growth in 2013 was the expiry of the narrowbanding deadline at the start of the year. Motorola’s government revenues in 2012 had received a boost from the narrowbanding mandate issued by the Federal Communications Commission, which necessitated a switch to a more efficient spectrum band for public safety operations. About 3% of the full year growth in government revenues was due to this increase in U.S. public safety spending. However, with the deadline for this transition passing on January 1, 2013, Motorola has found it tough to emulate the same kind of growth in its government business in the last few quarters.

As a result, Motorola’s government revenues were flat in the first three quarters of 2013 as compared to the same period last year, unlike the double-digit growth rates posted last year. The company expects growth in this segment to return in Q4, which should sustain itself in 2014 as well, unless federal spending weakens further. The downside in this case is also limited by the fact that public safety is usually down the priority list of areas in which governments will look to cut their spending. As a result, we see any impact to government revenues from sequestration, or the spending cuts that the federal government started implementing recently, being fairly muted.

Steady Recovery In The Enterprise

While government revenues are somewhat shielded from the effects of a tough macroeconomic environment, enterprises have proved to be more vulnerable to spending cuts across business verticals. With the government revenues not improving by much as compared to an exceptionally good 2012, the effect of the enterprise decline is being more acutely felt. However, this could change soon as macroeconomic concerns subside and business spending on infrastructure returns. Motorola’s improved performance on this front in the third quarter is a sign of the enterprise recovery that the company had guided for in the second half of the year. We will be looking at the Q4 results for signs that the enterprise recovery can be sustained going forward or not.

Despite the tough business environment, Motorola has been focusing on maintaining market share within the enterprise segment through important acquisitions, such as Rhomobile in 2011 and Psion in 2012. The company has already leveraged its Rhomobile acquisition to launch an application framework targeted at enterprise developers and promote sales of its rugged handheld devices. The Psion purchase will help it expand globally and strengthen its mobile computing portfolio. We see Motorola’s enterprise focus helping it tide over the near-term macroeconomic concerns while preparing itself for the high future demand for enterprise mobile computing devices.

It is also a good sign for the future that the company has been successful in driving efficiency through its operations, which helped Q3 margins improve to 18.8% from 18% last year. For the full year 2013, Motorola is confident of achieving operating margins of 18%, which is a growth of 70 basis points over last year. The company also expects to increase its margins by another 100 basis points this year, benefiting from not just the cost controls in place but also an expected recovery in enterprise spending. Over the longer term, however, we expect margins to decline as competition rises in the coming years from rivals increasingly addressing the ongoing transition of public safety networks from analog to digital.

See More at Trefis | View Interactive S&P Capital IQ Analyses (Powered by Trefis)

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.

Source: Forbes Business


7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of ...
Source: Business Times Singapore   Full article at: Business Times Singapore


7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of ...
Source: Business Times Singapore   Full article at: Business Times Singapore


Don't miss ...


<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.


blog comments powered by Disqus

Latest stories

EU to intensify efforts against Ebola
Brussels, Oct 21 (IANS) The European Union (EU) has decided to intensify efforts to protect its citizens, health workers against the ongoing spread of the Ebola virus in West Africa.
Germany, France agree to boost investment
Berlin, Oct 21 (IANS) Germany and France have agreed to strengthen investment for the euro zone economy.
EU strengthens sanctions against Syria
Brussels, Oct 21 (IANS) The European Union (EU) Monday announced it was strengthening sanctions against Syria.
Lufthansa pilots' strike causes 1,500 flight cancellations
Berlin, Oct 21 (IANS) German airline Lufthansa cancelled over 1,500 flights Monday after its pilots union announced to extend the 35-hour strike to include long-haul fleets.

Latest from the Network

1,074 new dengue cases in Chinese province
Beijing, Oct 18 (IANS) China's Guangdong province has reported 1,047 new cases of dengue fever, health authorities said Saturday. Six people have already died in Guangdong -- five in Guangzhou and one in adjacent...
Read more on Business Balla
Blake Lively 'always' wanted to be mum
Blake Lively has ''always'' wanted to be a mother. The 27-year-old actress is expecting her first child with husband Ryan Reynolds and she admits she's been dreaming of this moment since she was a youngster. Speaking...
Read more on Celebrity Balla
Kris Jenner 'torn apart' by Bruce's new relationship
Kris Jenner feels ''torn apart and angry'' that Bruce Jenner is dating her former assistant. The 58-year-old matriarch split from the 64-year-old Olympic gold medalist last October following 22-years of marriage but is...
Read more on Celebrity Balla
Cheryl Fernandez-Versini won't move to France
Cheryl Fernandez-Versini doesn't want to move to her husband's home country of France. The 'X Factor' judge, 31, who comes from Newcastle, is adamant she won't be relocating any time soon to suit her new spouse Jean-...
Read more on Celebrity Balla
Lance Bass sets wedding date
Lance Bass has set a date for his wedding. The former *NSYNC singer and his partner Michael Turchin, who have been dating for two-and-a-half years, are to tie the knot on December 20, 2014, a representative for the...
Read more on Celebrity Balla
Nepal avalanche toll reaches 39
Kathmandu, Oct 18 (IANS) At least 39 climbers died while hiking on a key Nepali route after it was hit by a major snowstorm and avalanches earlier this week, BBC reported Saturday citing officials. Over 350 stranded...
Read more on Politics Balla
Jake Gyllenhaal says society is complicit in 'nightcrawling'
Jake Gyllenhaal says almost everybody in society ought to relate to his new movie 'Nightcrawlers'. The eagerly-awaited film concerns those people who monitor police scanners and then race to crime scenes to film eye-...
Read more on Movie Balla
India eves look for first win in AFC U-16 qualifiers
Dhaka, Oct 18 (IANS) India will hope to register their first win of the 2015 Asian Football Confederation (AFC) Under-16 Women's Championship qualifiers when they take on hosts Bangladesh in a crucial encounter at the...
Read more on Sport Balla
Moyes mulling return to management
London, Oct 18 (IANS) Former Manchester United manager David Moyes said that he is ready to revive his managerial career six months after being sacked by the 'Red Devils'. "I am ready to return. I have enjoyed the...
Read more on Sport Balla
Ebola fears loom over Ghana hosting AFCON
Accra (Ghana), Oct 18 (IANS) The Ghana Medical Association (GMA) cautioned the government Saturday against hosting the 2015 African Cup of Nations (AFCON), despite a request by the Confederation of African Football (...
Read more on Sport Balla