A Look At Motorola Solutions’ Position As A U.S. Government Contractor
Every year, Motorola Solutions (NYSE:MSI) wins a number of government contracts for smart public safety solutions, which pushes its order backlog up. These orders are billed in the same or the subsequent years, and they ultimately add incremental revenues to the company. However, these numbers alone do not tell us if Motorola is indeed strengthening its footing in the U.S. with every passing year. To determine the aforementioned, it makes sense to relate Motorola’s annual revenues coming from the U.S. government contracts to the federal government’s annual homeland security budget.
The table below indicates that Motorola Solutions’ share has been coming down since 2013 due to weaker device sales in the U.S. and public safety budget cuts which likely gave a competitive edge to Motorola’s low-cost peers. However, the share is expected to recover in 2016 as the company is leveraging its product innovations to present a better portfolio for new contracts and charge higher for existing services. For instance, by leveraging Airwave’s technological expertise, Motorola is planning to create a more reliable communication network for its TETRA radio devices being used by law enforcement and other government agencies in the U.S. The company has mentioned that, in addition to being a recurring revenue source, Airwave provides a platform to expand its managed services business.
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Sources – Federal Research Reserve & Department of Homeland Security
Considerations –
- Even though all the contracts may not be billed in the same year, a comparison over an extended period of time should neutralize the timing impact – at least for the purpose of calculations.
- Since the U.S.-Canada revenue isn’t available, we’ve used the combined revenues for year-over-year comparisons safely assuming that a major share comes from the U.S.
- The aforementioned share may not be accurate, but it does provide a perspective from which Motorola’s footing in the market can be pictured.
Have more questions about Motorola Solutions See the links below:
Notes:
- What’s Motorola Solutions’ Revenue And Net Income Breakdown In Terms Of Different Operating Segments?
- How Has Motorola’s Revenue & Cash Profit Composition Changed In The Last Four Years?
- By How Much Have Motorola Solutions’ Revenue and EBITDA Increased In The Last Five Years?
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