Motorola Solutions’ (NYSE:MSI) stock hasn’t shown much volatility in the past and has remained largely stable despite the volatility in broader markets. In the last quarter, the company got the boost from higher business or the enterprise spending and benefited from the higher sales of bar-code scanners used by businesses, especially from retailers, transportation and logistics verticals (see Business Spending Props up Motorola Solutions). Motorola Solutions recently introduced a 7-inch touchscreen rugged tablet based on Google’s (NASDAQ:GOOG) Android operating system that will initially be deployed for workers in retail stores and warehouses, and then to its government customers.  Though business spending is holding up for the most part in this earnings season, government spending may come under duress given the political climate and need to cut federal spending.
Government Spending Cuts Remains a Risk
The company continue to benefit from higher business spending, but the risk that the investors should look forward to is the declining government spending. Recently the U.S. government announced proposal for budget cuts to achieve $1.2 trillion in savings over a 10-year period.  Motorola Solutions is expected to announce its Q3 2011 earnings on October 27th, during which we will come to know if the company has started to suffer from government spending cuts or not.
We maintain $42.50 price estimate for Motorola Solutions stock, which is about 5% below market price.Notes:
- Motorola Solutions Introduces Its First Tablet Computer Built for Enterprise Users, Press Release, October 10th, 2011 [↩]
- Federal Budget (Obama Jobs Bill, 2012 Budget), New York Times, October 12th, 2011 [↩]