Motorola Solutions’ Earnings Preview: New Acquisitions And Innovations To Drive Growth

World leader in radio communication, Motorola Solutions (NYSE:MSI) is set to release its Q4 and full year earnings on February 2nd. In the first nine months of 2016, the company’s top line was bolstered by the synergies from Airwave acquisition. During the same period, Motorola’s operating margins increased by around 90 basis points led by the reduction in operating expenses. Similar cost cutting and operational efficiency measures resulted in a 5.3% reduction in operating expenses during Q3. The growth in EPS was further boosted by an aggressive share buyback program. In the 1st nine months of 2016, the company bought back stock worth $728 million.

The synergies from the Airwave integration will have a considerable impact on the earning reports for the first year of acquisition. Airwave was acquired in late 2015, therefore the growth in Q4 will again have a reasonable contribution from this acquisition. Apart from that, several product innovations and two minor acquisitions were the highlights in Q4 which are helping Motorola to cope with the ever changing technology market.

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Innovations And Acquisitions To Drive Long Term Growth

• Motorola acquired two technology companies in Q4, Spillman and Gridstone, that build application and software solutions for public safety and law enforcement agencies. This was done in order to enhance the software services provided along with the latest hardware technology of Motorola.
• In an effort to offer cloud solutions to its users, Motorola has acquired Mobile Application Communication System (MACS) and Integrated Communication Control System (ICCS) from Cyfas Systems Ltd. This will enable the digital transformation of control rooms from the hardware based delivery system to secure cloud based solutions.
• To grab the attention of outdoor enthusiasts, Motorola launched ‘Talkabout’ radios in Latin America for communication during recreational activities.
• In addition, Motorola has opened an innovation center in Israel to ramp up its research activities.
• All the innovations, acquisitions and new launches are signalling Motorola’s ability to cope up with the changing technology which will not only strengthen the services division, but will also prove to be a tailwind to the product business of the company which has been remained sluggish in 2016 due to softness in China.

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