Motorola Solutions’ New Products Likely To Boost Sales

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Motorola Solutions

Motorola Solutions (NYSE:MSI) recently introduced a host of new mobile communication devices, catering to enterprises, public safety personnel and individual buyers. For enterprises, the company introduced a 4.7-inch touch computer called Symbol TC70, which runs the Android KitKat operating system and combines the features of a smartphone with the high performance and durability demanded by enterprises. For public safety personnel, the company introduced another 4.7-inch device called the LEX L10 Mission Critical LTE Handheld, which delivers mission critical capabilities to safety personnel to communicate in a secure, smarter and faster manner. This is Motorola Solutions’ first Public Safety LTE device featuring its new Public Safety Experience (PSX) user interface, which is capable of intelligently prioritizing information provided to the responder. In addition to these devices, the company also introduced a new simple, slim and portable push-to-talk communication device called MOTOTRBO SL300 and a two-way radio designed specifically for serious outdoor enthusiasts, called the Motorola Talkabout MU350R. [1] [2] [3] [4]

The new devices are likely to help boost the company’s product sales going forward, which have declined consistently over the last few quarters after an already sluggish last year. Motorola’s government business suffered the most, due to global macroeconomic uncertainties and a higher-than-expected overhanging impact of narrowbanding in North America. Now that the company has completed the sale of a major chunk of its enterprise business to Zebra Technologies, it will be able to focus on its core areas such as public safety devices, software products and network infrastructure. With gradually improving macroeconomic conditions, this should translate into meaningful growth in sales going forward. [5]

Our $64 price estimate for Motorola is in line with the current market price.

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See our complete analysis for Motorola Solutions here

Public Safety LTE: Key For Top Line Growth

Going forward, we see the adoption of LTE for public safety use, along with the broader analog-to-digital shift in the U.S. and internationally, as the key drivers of Motorola’s value. U.S. public safety spending in the coming years will be bolstered by the job creation bill passed in 2012 that reallocated the D Block spectrum for public safety use and provided a funding of $7 billion to build out a nationwide network over eight years. We expect Motorola to benefit from the stickiness of its government customers, as well as its strong market position and large installed base of security devices, and grab a big chunk of that market going forward.

The Los Angeles Regional Interoperable Communication System Authority (LA-RICS) selected Motorola to develop a 4G LTE based Public Safety Broadband Network (PSBN) for public safety agencies in the Los Angeles region in March. The company is progressing well with this $175 million project, which is expected to generate about $50 million in revenue in the latter half of this year. In addition, the company’s first quarter launch of APX 7000L – its first two-way portable radio that works on both legacy LMR (Land Mobile Radio) and next-generation 4G LTE networks – and its recent launch of the LEX L10 Mission Critical LTE Handheld – which works on Public Safety LTE as well as Verizon’s 3G/4G – bolsters our view that Motorola has positioned itself strongly to benefit from the LTE transition in the years to come.

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Notes:
  1. TC70 Press Release, Motorola Solutions, Oct 21 2014 []
  2. LEX L10 Press Release, Motorola Solutions, Oct 23 2014 []
  3. MOTOTRBO SL300 Press Release, Motorola Solutions, Oct 7 2014 []
  4. MU350R Press Release, Motorola Solutions, Sept 15 2014 []
  5. ZEBRA TECHNOLOGIES COMPLETES ACQUISITION OF MOTOROLA SOLUTIONS’ ENTERPRISE BUSINESS, Zebra Technologies, Oct 27 2014 []