Back to top

Analyst Blog

Motorola Solutions Inc. (MSI - Analyst Report) reported disappointing financial results for the first quarter of 2014, where both its top and bottom line missed the Zacks Consensus Estimate.

Quarterly GAAP net income came in at $127 million or 49 cents per share compared with $192 million or 68 cents per share in the prior-year quarter. Adjusted earnings per share of 40 cents were a penny shy of the Zacks Consensus Estimate. Quarterly total revenue was $1,801 million, up 8.7% year over year and but fell below the Zacks Consensus Estimate of $1,821 million.

Quarterly gross margin stood at 46.9% against 48.4% in the prior-year quarter. Operating income, in the reported quarter, was $170 million, down 21.3% year over year. Quarterly operating margin was 9.4% compared with 10.9% in the prior-year quarter. In the reported quarter, Motorola Solutions repurchased shares worth $57 million.

Motorola Solutions generated $46 million in cash from operations in first-quarter 2014 compared with a negative $31 million in the year-ago quarter. Quarterly free cash flow was $1 million as against a negative $77 million in the year-ago quarter.

At the end of the first quarter of 2014, Motorola Solutions had $3,141 million in cash, cash equivalents and marketable securities compared with $3,225 million at the end of 2013. Total debt, at the end of the reported quarter, stood at $2,466 million as against $2,457 million at the end of 2013. The debt-to-capitalization ratio at the end of first-quarter 2014 was 0.40 compared with 0.48 at the end of 2013.

Government Segment

Quarterly total revenue was $1,201 million, down 11% year over year. Operating income came in at $113 million, down 37% year over year.

Enterprise Segment

Quarterly total revenue was $600 million, down 4% year over year. Operating income stood at $57 million, up 58% year over year.

Performance by Category

Quarterly Product revenues totaled $1,211 million, down 12.3% year over year. Services revenues were $590 million, remaining almost flat year over year. Quarterly Product gross margin was 51.9% compared with 52.9% in the year-ago quarter. Services gross margin was 36.8% as against 38% in the comparable year-ago quarter.

Financial Outlook

Motorola Solutions expects revenues for second quarter of fiscal 2014 to drop 5% - 8% year over year while Non-GAAP earnings per share are likely to be in the range of 58 cents to 64 cents.

For full-fiscal 2014, Motorola Solutions expects revenues to decline by a low single digit year over year. Non-GAAP operating margin is estimated to be around 18.5%.

Other Stocks to Consider

Motorola Solutions currently has a Zacks Rank #5 (Strong Sell). Other stocks worth considering in the wireless equipment sector include Polycom Inc. (PLCM - Analyst Report), ShoreTel Inc. (SHOR - Snapshot Report) and Harris Corp. (HRS - Analyst Report). Both Polycom and ShoreTel currently carry a Zacks Rank #1 (Strong Buy) whereas Harris carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.