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Motorola Solutions (MSI) Signs Agreement With UK Home Office

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Motorola Solutions, Inc. (MSI - Free Report) recently reached an agreement with the U.K. Home Office for a phased implementation of the new Emergency Services Network (ESN), in addition to an agreement for extending the nationwide Airwave digital radio network.

Supporting the phased deployment of the ESN program, the ESN agreement will benefit the public safety organizations with the capabilities of new network. Notably, the agreement will enable the public safety organizations across the United Kingdom to implement ESN capabilities at their own pace while maintaining the Airwave network service. Motorola will work on the implementation of a 3GPP standards-based push-to-talk software solution with the use of technology from its subsidiary Kodiak Networks.

Notably, the ESN agreement with the company is likely to be extended 30 months to the end of 2024 to support the new phased deployment strategy. Also, with regard to the Airwave agreement, it will extend the network on similar terms for three more years to end of 2022.

Existing Business Scenario

Motorola is able to sell cloud-first SaaS offerings in addition to on-premise solutions with ancillary implementation and managed services as the public safety market continues to embrace software offerings to enhance workflows. The company continues to expand its software offerings to provide solutions across the various segments of the public safety workflow. These systems drive demand for additional device sales, software upgrades, infrastructure refresh and expansion, as well as additional services to maintain, monitor and manage these complex networks and solutions.

As the leading provider of mission-critical communication products and services for government and commercial customers alike, Motorola has ensured a steady revenue stream from this niche market. In an effort to further expand its public safety measures, the company has launched new broadband service, high power mobile radio and mobile app solutions, dedicated to public security. Notably, in the past year, this Zacks Rank #3 (Hold) stock has yielded a return of 53.8%, outperforming the industry’s growth of 31.4%.

However, higher working capital requirement due to the implementation of a new ERP system is hurting the cash flow, limiting its growth potential to some extent.

Stocks to Consider

Some better-ranked stocks from the same space are Ubiquiti Networks, Inc. , QUALCOMM Incorporated (QCOM - Free Report) and Clearfield, Inc. (CLFD - Free Report) . While Ubiquiti Networks sports a Zacks Rank #1 (Strong Buy), QUALCOMM and Clearfield carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ubiquiti Networks outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 8.96%.

QUALCOMM surpassed estimates in each of the preceding four quarters, with an average earnings surprise of 19.75%.

Clearfield outpaced estimates in each of the trailing four quarters, with an average positive earnings surprise of 52.78%.

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