Solid 4Q10 for Motorola Solutions - Analyst Blog

Today, Motorola Solutions Inc. (MSI) reported its fourth quarter 2010 financial results. It was the company's first earnings report after it separated from former Motorola Inc. In the reported quarter, both top and bottom lines of Motorola Solutions saw sharp rises.

The fourth quarter 2010 results excludes the part of the business apportioned for sale to Nokia Siemens Networks, a joint venture between Nokia Corp. (NOK) and Siemens AG (SI) in the first quarter of 2011.

Quarterly total revenue was $7,871 million, up 13% year over year. Segment-wise, Government Businesses generated approximately $1.5 billion and Enterprise Businesses accounted for the remaining $746 million.

Quarterly GAAP net income was $194 million or 57 cents per share. Adjusted (excluding special items) earning per share (EPS) in the fourth quarter of 2010 were 59 cents. Quarterly gross margin was 49.6% and operating margin was 12.4%.

Fiscal 2010 total revenue was $2,246 million, up 10% year over year. Selling, general and administrative expenses were $1,909 million and research and development expenses were $1,079 million. The GAAP net income for full year 2010 was $259 million or 77 cents per share. Adjusted EPS (excluding special items) in fiscal 2010 was $1.57. Gross margin was 49.8% and operating margin was 9.9%.

At the end of fiscal 2010, Motorola Solutions had $5,733 million of cash, cash equivalents and marketable securities and $2,702 million of total debt outstanding on its balance sheet.

Future Financial Outlook

Motorola Solutions projects its first quarter 2011 revenue to grow 3-4% year over year. The expected EPS from continuing operation is within the range of 29 cents to 34 cents.  

Recommendation

Motorola Solutions commands nearly half of the total public safety market in the U.S. The company is the largest manufacturer of barcode readers and small rugged mobile computers. The first dividend is expected to be declared in late 2011.

We maintain our long-term Neutral recommendation for Motorola Solutions. Currently, it has a short-term Zacks #3 Rank (Hold) on the stock.

 
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