Motorola Solutions Q3 Profit Tops View, Revenues Miss; Shares Up On Rosy Outlook

(RTTNews) - Communications equipment maker Motorola Solutions, Inc. (MSI) reported Wednesday a profit for the third quarter that surged from last year, reflecting improved operating margins and lower income tax expenses. Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates by a whisker.

The company also provided earnings guidance for the full-year 2013, above Street view, with annual revenues seen to remain flat.

Motorola Solutions, which makes communication infrastructure, devices and software, was created in January 2011 when Motorola, Inc. was split into two independent public companies. The other entity, Motorola Mobility, was later acquired by Google, Inc. (GOOG).

"In the third quarter, we expanded operating margins, reduced costs and delivered double-digit EPS growth. In addition, we are on track to achieve 18 percent operating margin for the full year," Chairman and CEO Greg Brown said in a statement.

Schaumburg, Illinois-based Motorola Solutions reported net earnings of $307 million or $1.16 per share for the third quarter, higher than $324 million or $0.72 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $397 million or $1.32 per share, compared to last year's $387 million or $0.84 per share.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $1.02 per share for the quarter. Analysts estimates typically exclude special items.

Total sales for the quarter declined 2 percent to $2.11 billion from $2.15 billion in the same quarter last year, and missed fifteen Wall Street analysts' consensus estimate of $2.13 billion by a whisker.

Net sales from products decreased to $1.48 billion from $1.57 billion, while net sales from services were $630 million, up from $586 million last year.

Government segment sales declined 4 percent to $1.47 billion, while enterprise segment sales grew 2 percent to $647 million from last year. Excluding Psion, enterprise segment sales were down 5 percent.

Gross margin for the quarter contracted 90 basis points to 49.4 percent, while operating margins improved 20 basis points to 15.2 percent from last year on lower expenses. Income tax expense for the quarter plunged to $17 million from last year's $118 million.

Looking ahead to fiscal 2013, the company expects adjusted earnings from continuing operations in a range of $4.63 to $4.70 per share, on anticipated flat revenues compared to $8.70 billion reported in fiscal 2012.

Street is currently looking for full-year 2013 earnings of $4.43 per share on annual revenues of $8.72 billion.

In Wednesday's regular trading session, MSI is currently trading at $64.96, up $4.53 or 7.50% on a volume of 2.41 million shares.