10 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

 
 
 

26 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

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told tod ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

Hawthorn Hawks Training Session
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into b ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat toda ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minis ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states las ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Moham ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 millio ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Schem ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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

China's yuan weakens
Beijing, July 25 (IANS) The value of the Chinese currency renminbi, or the yuan, weakened by 18 basis points to 6.1597 against the US dollar in its central parity Friday, authorities said.
 
 
2.2 bn people are 'poor or near-poor': UN report
United Nations, July 25 (IANS) Approximately 2.2 billion people around the world are "poor or near-poor," a UN flagship report said Thursday, calling for stronger collective global action in response to vulnerabilities in order to securing human development progress.
 
 
White House sets $10 bn fund for rural infrastructure
Washington, July 25 (IANS) The White House Rural Council Thursday announced a fund of $10 billion to support rural infrastructure projects across the country.
 
 
European bank's website hacked, data stolen
Brussels, July 25 (IANS) The European Central Bank (ECB) Thursday said its website had been hacked and some email addresses and other contact information stolen, but insisted no market-sensitive data was compromised.
 
 
 

Latest from the Network

Commonwealth Games Day 1 medal standings
Glasgow, July 25 (IANS) England led the medal standings at the end of first day of the 20th Commonwealth Games followed by Australia and hosts Scotland. India was at the fourth position with two golds, three silvers...
Read more on Sport Balla
 
CWG 2014: Indian shuttlers outclass Uganda
Glasgow, July 25 (IANS) Indian shuttlers registered their second successive win in Group B of Commonwealth Games 2014 by defeating Uganda 5-0 in the mixed team event at the Emirates Arena here Thursday. World...
Read more on Sport Balla
 
China's yuan weakens
Beijing, July 25 (IANS) The value of the Chinese currency renminbi, or the yuan, weakened by 18 basis points to 6.1597 against the US dollar in its central parity Friday, authorities said. In China's foreign exchange...
Read more on Business Balla
 
Poland cancels cultural project with Russia
Warsaw, July 25 (IANS) The Polish government Thursday announced that it has cancelled plans for celebrating Poland Year in Russia and Russia Year in Poland, a cultural project planned for 2015. "The decision was taken...
Read more on Celebrity Balla
 
Bieber bags Calvin Klein endorsement deal
Los Angeles, July 25 (IANS) Singer Justin Bieber's has landed an endorsement deal with Calvin Klein (CK) and shot a campaign for the brand's underwear range. The 20-year-old joins the ranks of supermodels Kate Moss...
Read more on Celebrity Balla
 
US House panel supports lawsuit against Obama
Washington, July 25 (IANS) The US House Rules Committee Thursday approved a resolution allowing the full House to vote on authorising a lawsuit against US President Barack Obama, accusing him of abusing executive...
Read more on Politics Balla
 
Algeria confirms missing aircraft crashed in Mali
Algiers, July 25 (IANS) Algeria Thursday confirmed that the missing flight AH 5017 of Air Algeria with 116 people on board crashed in Mali, media reports said. "We can confirm that the plane crashed in Malian...
Read more on Politics Balla
 
Tori hopes to discuss relationship issues with kids
Los Angeles, July 25 (IANS) Actress Tori Spelling she hopes to one day have a "candid" with her children about problems in her married life so that they can understand the nuances of a relationship. She was devastated...
Read more on Celebrity Balla
 
Kaka set for Sao Paulo return after 11 years
Rio de Janeiro, July 25 (IANS) Kaka is set to make his long awaited return for Sao Paulo Sunday, 11 years after his last appearance for the Brazilian club. The 32-year-old, who joined his former side on a six-month...
Read more on Sport Balla
 
Chris Pratt's wife to 'fatten' him up
Chris Pratt's wife is trying to ''fatten'' him up. The 35-year-old hunk dropped more than 60lbs in just six months for his role in 'Guardians of the Galaxy' but now that filming has wrapped up, he admits his spouse...
Read more on Celebrity Balla