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Motorola (MSI) Earnings and Revenues Beat Estimates in Q3

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Motorola Solutions Inc.’s (MSI - Free Report) third-quarter 2016 earnings per share (including stock-based compensation expenses) of $1.30 per share comfortably beat the Zacks Consensus Estimate of $1.14. Also, earnings improved 71.1% from the year-ago figure due to a significant reduction in costs and increase in sales.

Revenues in the quarter increased 8% from the year-ago quarter to $1,532 million and also surpassed the Zacks Consensus Estimate of $1,515 million. Operating margin (on an adjusted basis) came in at 25.8% in the quarter compared with 20.5% a year ago.

Operating Results

Product segment revenues came in at $920 million in the third quarter, down 1% year over year due to weaker revenues from Africa and China.

Services revenues totaled $612 million, up 23% year over year. The inclusion of products of the recently acquired Airwave Solutions as well as 5% organic growth in Managed & Support services drove the upside.

Motorola generated $348 million of cash from operations in the third quarter as against $301 million in the prior-year quarter. At the end of the quarter under review, Motorola had $1,687 million in cash and cash equivalents compared with $1,980 million at the end of 2015. Long-term debt, was $5,044 million at the end of the quarter compared with $4,345 million at the end of 2015.

Share Repurchase and Dividends

The company returned approximately $109 million to shareholders through buybacks and $70 million in dividends in the third quarter of 2016.

Spillman Acquisition           

The company announced, last month, that it intends to acquire Spillman Technologies, which provides holistic law enforcement and public safety software solutions. This acquisition is expected to boost the company’s customer base by adding value to its high tier command center software offerings.

MOTOROLA SOLUTN Price, Consensus and EPS Surprise

 

Outlook

Motorola expects revenues in the fourth quarter to improve by 9% to 10%, on a year-over-year basis. The Airwave Solutions buyout is expected to boost fourth-quarter revenues by about $120 million. Adjusted earnings per share in the fourth quarter are projected in the band of $1.82 to $1.87. The Zacks Consensus Estimate of $1.75 is within the guided range.

Motorola currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Some of its peers in the broader computer and technology sector that also beat the Zacks Consensus Estimate in the quarter ending in September include Harris Corp. (HRS - Free Report) , Juniper Networks inc. (JNPR - Free Report) , and ADTRAN Inc. (ADTN - Free Report) .

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