--Motorola Solutions third-quarter profit rises 61%
--Government business drives growth as enterprise segment stays
slow
--Enterprise expected to resume to growth in 2013, CEO says
(Adds details beginning in the second paragraph)
By Thomas Gryta and Ben Fox Rubin
Motorola Solutions Inc.'s (MSI) third-quarter earnings rose 61%
as the company's government business posted stronger revenue, while
the enterprise segment's revenue continued to decline.
The Schaumberg, Ill. company provides public-safety radios,
handheld scanners and telecommunications-network gear. Its
enterprise business can be affected by macroeconomic factors around
the world, while its government business has been more resilient
because it is seen as a necessity to customers.
"Public safety is a must-have, not a nice-to-have," Motorola
Solutions Chief Executive Greg Brown said in an interview
Wednesday. He said the company feels positive about public safety
spending in the fourth quarter and heading into 2013, both in the
U.S. and overseas.
Motorola Solutions was created last year in the split of
Motorola Inc. The spinoff put the higher-profile mobile-devices and
TV-set-top-box operations into Motorola Mobility Holdings Inc.,
which was then acquired by Google Inc. (GOOG) in May for $12.5
billion.
The company posted a profit of $206 million, or 72 cents a
share, up from $128 million, or 38 cents a share, a year earlier.
Excluding items, earnings from continuing operations rose to 84
cents from 66 cents, above the company's July prediction of 69
cents to 74 cents.
Total revenue grew 3.3% to $2.15 billion, in line with analysts'
forecasts.
Government sales were up 12% to $1.5 billion, driven by strong
growth in North America. The smaller enterprise business posted 13%
lower revenue at $632 million, hurt by a decline in iDEN sales.
"Our enterprise results were disappointing. They are driven more
by macroeconomic headwinds primarily in Europe as well foreign
exchange difficulties," Mr. Brown said. The company also had fewer
large contracts in the quarter, when compared to the year-ago
quarter.
He added that there is also "a bit of a pause" from enterprise
customers as Microsoft Corp. (MSFT) transitions to Windows 8
because Motorola's customers are almost entirely running Microsoft
software.
"Customers are being more prudent," he said.
He expects that the enterprise results will be "generally flat"
in the fourth quarter, and return to growth at some point in
2013.
As time passes, the decline of the company's legacy iDEN network
business will fade, he said. The business contributed about half of
the enterprise division's decline in the third quarter.
Mr. Brown said that the company, which has about $3.5 billion in
cash, will be opportunistic when looking for acquisitions and will
continue to work on returning capital to shareholders. The company
has repurchased about $308 million shares in the recent
quarter.
Foreign exchange cut the company's revenue by $42 million in the
quarter. Mr. Brown expect the impact to be about $20 million to $25
million in the fourth quarter. The company raised its revenue
estimates for the year, predicting 6% to 6.5% growth, from its
previous view of 5% to 6%.
For the current quarter, the company expects earnings from
continuing operations of 98 cents to $1.03 a share on sales growth
of 6% to 7%. Analysts surveyed by Thomson Reuters expected $1.02 a
share in earnings and 5% revenue growth.
Write to Thomas Gryta at thomas.gryta@dowjones.com
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