Strong 4Q for Motorola Solutions - Analyst Blog
23 Gennaio 2013 - 3:24PM
Zacks
Before the opening bell, Motorola Solutions
Inc. (MSI) reported strong financial results for the
fourth quarter of 2012, with the bottom line surpassing the Zacks
Consensus Estimate but the top line missing the same.
Fourth-Quarter Results in Details
Quarterly GAAP net income from continuing operations was $423
million or $1.18 per share compared with $276 million or 54 cents
per share in the prior-year quarter.
Adjusted EPS of $1.10 in the quarter was well above the Zacks
Consensus Estimate of 92 cents. Quarterly total revenue was $2,441
million, up 6% year over year, but was slightly below the Zacks
Consensus Estimate of $2,454 million. The growth in revenue was
mainly fueled by higher global demand across the government
segments.
Quarterly gross margin was 50.3% compared with 50.4% in the
prior-year quarter. Operating income in the reported quarter was
$423 million, up by a whopping 53.3% year over year. Quarterly
operating margin was 17.3% versus 12% in the prior-year quarter.
During the fourth quarter of 2012, Motorola Solutions repurchased
shares worth $326 million.
During the quarter, Motorola Solutions generated $564 million in
cash from operations compared with $44 million in the year-ago
quarter. Quarterly free cash flow (operating cash flow less capital
expenditure) was $517 million compared with a negative $39 million
in the prior-year quarter.
At the end of the fourth quarter of fiscal 2012, Motorola
Solutions had $3,603 million in cash, cash equivalents and
marketable securities against $5,091 million at the end of fiscal
2011. Total debt at the end of the quarter was $1,859 million
compared with $1,130 million at the end of fiscal 2011.
Debt-to-capitalization ratio at the end of the reported quarter was
0.36 compared with 0.18 at the end of fiscal 2011.
Government Segment
Quarterly total revenue was $1,708 million, up 10% year over
year. Operating income came in at $346 million, up by a significant
53% year over year.
EnterpriseSegment
Quarterly total revenue was $733 million, down 3% year over
year. Operating income stood at $77 million, up 54% year over
year.
Performance by Category
Quarterly product revenue was $1,789 million, up 5.9% year over
year. Services revenue was $652 million, up 6.7% year over year.
Quarterly product gross margin was 55.8% compared with 54.2% in the
year-ago quarter. Services gross margin was 35.4% compared with
40.1% in the year-ago quarter.
Future Financial Outlook
Motorola Solutions expects first-quarter 2013 revenue to grow
between 4% and 5% year over year. EPS from continuing operations is
expected in the range of 62 cents to 67 cents.
For fiscal 2013, revenue is expected to grow 5% to 5.5% year
over year while Non-GAAP operating income is expected to be 18% of
the total revenue.
Other Stocks Set for Earnings Release
Some other companies, which are about to release their financial
results in the upcoming days are Nokia Corporation
(NOK), which will report its fourth quarter results on Jan 24
while Harris Corporation
(HRS) is set to releaseits second quarter
2013 results on Jan 29.
Recommendation
We believe that huge market share for public safety products,
recent acquisition and continuous order wins will consistently
drive both the top and bottom lines of the company going
forward.
However, the company is heavily dependent on government
expenditures for its revenue. Approximately 65% of the total sales
of Motorola Solutions are from government agencies.
Therefore, we believe that a slowdown in the government
expenditures owing to budgetary pressures may significantly
jeopardize the company’s overall financials; hence the company has
also slashed its future growth outlook. Moreover, Sprint
Nextel Corp. (S) has planned to gradually phase out of
iDEN network, which may act as a major setback for the company
going forward.
Currently, Motorola Solutions Inc. has a Zacks Rank #3
(Hold).
HARRIS CORP (HRS): Free Stock Analysis Report
MOTOROLA SOLUTN (MSI): Free Stock Analysis Report
NOKIA CP-ADR A (NOK): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
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