Motorola Solutions Profits Surge in Q4 on Higher Government Sales

Andrew Klips  |

Communication solutions and services provider Motorola Solutions Inc. (MSI) reported Wednesday that fourth-quarter operating earnings swelled by 53 percent compared to the year prior quarter, beating analyst predictions, as revenue from government contracts expanded.

The Schaumburg, Illinois-based company said that GAAP-basis operating earnings climbed to $423 million, or $1.18 per share, a 119 percent improvement from $276 million, or 54 cents per shares in the fourth quarter of 2011.  Adjusted earnings, which exclude items after-tax net income, stock-based compensation and other items, were $1.10 per share, 26 percent higher than last year’s Q4 EPS of 87 cents.

Total sales increased by 6 percent to $2.44 billion compared to the year earlier quarter’s $2.30 billion. Analysts were expecting revenue of $2.45 billion and adjusted earnings of $1.02 per share.

These results included revenue for Psion, which was acquired by Motorola Solutions on Oct. 1, 2012 for $200 million in cash.

"It was another outstanding year for Motorola Solutions as we continued to deliver strong operational and financial results," said Greg Brown, chairman and CEO of Motorola Solutions. "We strengthened our product portfolio, expanded operating margins, generated $1.1 billion in operating cash and returned $2.7 billion in capital to our shareholders."

Government segment sales were $1.7 billion, up 10 percent from the year-ago quarter.  For the full year 2012, government segment sales were $6.0 billion, up 12 percent from 2011, as the company secured multimillion dollar contracts with many customers in the United States and internationally.

On the flip side, sales from the company’s enterprise segment were $733 million, down 3 percent from the year-ago quarter.  For the full year 2012, enterprise segment sales were $2.7 billion, down 5 percent from 2011, although contracts from key customers like Target (TGT), The Home Depot (HD) and more were secured going forward.

For the full year 2012, the communications gear maker reported a 6 percent increase in revenue to $8.7 billion from $8.2 billion in 2011.  Adjusted operating earnings during the year rose to $1.5 billion, a 9 percent increase over the complete year earlier.   Adjusted EPS for 2012 rose to $3.20 per share from $2.61 per share in 2011, a 23 percent climb.

Looking ahead, the company forecast revenue growth of 4 to 5 percent in the first quarter of 2013 compared to Q1 2012.  Non-GAAP earnings per share from continuing operations is anticipated to be in the range of 62 cents to 67 cents for the quarter.  For all of 2013, the company projects revenue growth of 5 to 5.5 percent from 2012 and Non-GAAP operating earnings of about 18 percent of sales, excluding stock-based compensation and other typical items.

Analysts were expecting the company to forecast Q1 2013 EPS of 67 cents.

Shares of MSI closed Tuesday trading down by more than 1 percent at $58.29.  Shares have steadily trekked higher across the last 12 months, growing in value by about 32 percent.

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