Bloomberg News

Motorola Solutions Buys Back Stock as Profit Increases

July 25, 2012

Motorola Solutions Inc. (MSI:US), the electronics-equipment company that makes everything from walkie- talkies to scanning devices, raised its quarterly dividend and said it will buy back another $2 billion of shares, after reporting a 15 percent gain in second-quarter profit.

Net income before stock compensation and amortization climbed to $350 million from $304 million a year earlier, the Schaumburg, Illinois-based company, said today in a statement. Sales climbed 8.3 percent to $2.15 billion and its quarterly dividend will rise by 18 percent to 26 cents.

Motorola Solutions, created from the legacy business of Motorola Inc. after its mobile-phone division was spun off in January 2011, is winning more technology business from local government agencies and companies. It will introduce rugged tablets and mobile computers later this year using Google Inc.’s Android platform, Chief Executive Officer Greg Brown said.

Motorola relies mainly on Microsoft Corp. (MSFT:US)’s Windows software for its devices and the planned introduction later this year of a new Windows 8 platform gives Motorola a chance to “reassess” what it can offer on the platform, Brown said in a telephone interview today.

“I’m cautiously optimistic about it,” he said.

Motorola agreed to buy Psion Plc (PON) last month and will use the deal to expand its industrial mobile computing business, which sells computers with chunky cases and reinforced glass, Brown said.

Middle East, Asia

As Google made a deal to acquire Motorola Inc.’s spun-off mobile-phone business for $12.5 billion -- a transaction completed in May -- Motorola Solutions focused on securing contracts in the U.S., the Middle East and Asia. Its $193 million deal for London-based Psion was its first acquisition of an actual hardware maker since the spinoff.

“In the face of the declining euro and macroeconomic headwinds to print 8 percent revenue growth and beat consensus EPS estimates was very satisfying,” Brown said on a call with analysts after it reported earnings.

Profit from continuing operations excluding the compensation charges last quarter was 70 cents. That beat the average estimate of 69 cents, according to data compiled by Bloomberg. Sales beat the estimate of $2.11 billion.

Motorola Solutions rose 4.8 percent to $47.47 at 12:47 p.m. in New York. The shares had declined 2.2 percent this year before today.

Today’s dividend increase and stock repurchase is the latest move in Brown’s pledge to continue returning cash to shareholders. Motorola Solutions repurchased $1.17 billion worth of shares in February from billionaire investor Carl Icahn. It was Icahn who had pushed for a breakup of Motorola Inc., as he sought ways to improve the return of his investment in the slumping stock.

The next quarterly dividend will be payable on Oct. 15 to stockholders of record at the close of business on Sept. 14, according to the statement.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • MSI
    (Motorola Solutions Inc)
    • $61.88 USD
    • -0.16
    • -0.26%
  • MSFT
    (Microsoft Corp)
    • $47.52 USD
    • 0.84
    • 1.77%
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