MSI Motorola Solutions Inc

Zebra Technologies Corp. said sales slipped in its latest quarter as customers continued to rein in spending, though the bar-code company signaled that the downturn wouldn't accelerate during the second half of the year.

Shares rose 8.5% in early trading after Zebra backed its view for the year and said its second-quarter sales decline was less steep than analysts projected.

The Illinois company, known for the black-and-white bar codes it prints and reads, acquired Motorola's enterprise business two years ago for $3.5 billion. The acquisition, Zebra's biggest, was a bid to fend off competition by combining bar-code labels and radio tags with Motorola's computers and scanners.

But sales in the Motorola, or enterprise, business have softened in recent quarters, inching up 0.5% in the most recent period after falling 5.3% in the first quarter. Meanwhile, legacy sales declined 4.7% in the June quarter after dropping 5.7% in the first three months of the year.

Zebra isn't alone in feeling the pressure of reduced business spending. Late last month, the Commerce Department reported the third straight quarter of reduced business investment. Some economists called the 3.5% decline in second-quarter business-equipment investment particularly troubling. "It appears as though the headwinds from sluggish global growth, a strong dollar, depressed energy activity, tightening credit and rising election uncertainty are having a lingering and pervasive effect on business decisions," Gregory Daco, U.S. economist at Oxford Economics, said last month in the wake of the disappointing gross domestic product report.

Zebra's Chief Executive Anders Gustafsson on Tuesday said second-quarter sales, which dipped 1.2%, matched his expectations. Mr. Gustafsson backed the full-year outlook issued in May, when Zebra cut guidance because of continued economic uncertainty and cautious spending behavior across the globe. "We are reiterating our full-year outlook with the assumption of no material change to the macro environment, and we remain fully committed to our strategic priorities," he said.

For the current quarter ending in September, Zebra guided for sales that would be flat to down 3%. Analysts have been looking for a 1.2% decline. Zebra sees $1.30 to $1.50 in adjusted per-share profit for the quarter, bracketing the $1.43 analysts have predicted.

Overall for the June period, Zebra reported a loss of $49 million, or 95 cents a share, narrower than its year-earlier loss of $77 million, or $1.50 a share. Excluding acquisition and integration costs, amortization of intangible assets and other items, the company earned $1.34 a share, up from $1.03 in the year-ago quarter.

Revenue fell to $879 million from $890 million. Analysts polled by Thomson Reuters expected $1.05 in adjusted earnings per share and $869.2 million in sales.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

August 09, 2016 10:05 ET (14:05 GMT)

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