Motorola Solutions Inc.’s MSI second-quarter 2015 earnings per share (including stock-based compensation expense) of 62 cents comfortably beat the Zacks Consensus Estimate of 48 cents. Earnings improved 55% from the year-ago figure.
Lower costs boosted the bottom line. Including special items, the company reported earnings per share of 72 cents, as opposed to 30 cents reported a year ago. Revenues steered ahead of the Zacks Consensus Estimate of $1,336 million. The outperformance pleased the investors and consequently the stock gained in early trading.
Quarterly revenues declined 2% from the year-ago quarter to $1, 368 million.The top line was negatively impacted by foreign currency movements to the tune of $53 million. North America performed well in the quarter with revenues climbing 5% on the back of higher product sales.
Operating margin (on an adjusted basis) came in at 19% in the quarter, compared with 14.4% a year ago. Quarterly Product revenues totaled $867 million, down 2.25% year over year. Weakness in Europe, Africa and Latin America, apart from adverse foreign currency movements, resulted in lower product sales. Services revenues totaled $501 million, down 1% year over year due to adverse foreign exchange impact and lower iDEN revenues.
Motorola Solutions generated $140 million of cash from operations in second-quarter 2015 compared with $118 million in the year-earlier quarter. Quarterly free cash flow totaled $92 million as against $77 million in the first quarter of 2015.
At the end of the quarter under review, Motorola Solutions had $3,112 million in cash and cash equivalents compared with $3,954 million at the end of 2014. Long-term debt, at the end of the quarter, stood at $3,393 million as against $3,396 million at the end of 2014. Meanwhile, debt-to-capitalization ratio was 0.65 compared with 0.55 at 2014-end.
Outlook
Motorola Solutions expects revenues in the third quarter of 2015 to decline in the range of 1% to 3% on a year-over-year basis (assuming a $50 million adverse currency impact). Adjusted earnings per share in the third quarter are projected in the band of 68 cents to 73 cents. The Zacks Consensus Estimate of 70 cents falls within the guidance range.
For 2015, the top line is projected to grow in the band of 1% to 3% (at constant currency). Earnings per share (on an adjusted basis) in 2015 are still expected in the range of $3.20 to $3.40. The Zacks Consensus Estimate of $3.00 per share lies below the guidance range.
Other News
Apart from announcing its quarterly results, Motorola Solutions stated that Silver Lake intends to invest $1 billion in the company to accelerate the growth of smart public safety solutions and services businesses.
The company stated further in its press release that it intends to commence a tender offer to buy back up to $2 billion worth of common stock.
Zacks Rank
Motorola Solutions currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the wireless equipment sector include Juniper Networks Inc. JNPR, InterDigital, Inc. IDCC and Ericsson ERIC. Juniper Networks sports a Zacks Rank #1 (Strong Buy), while InterDigital and Ericsson carry a Zacks Rank #2 (Buy).
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