Is Motorola Heating up in 2016? Highlights, Trends, Performance
Product segment
Motorola Solutions (MSI), which was negatively impacted by the strong US dollar (UUP), saw its revenues fall by 7% YoY (year-over-year) in 4Q15, driven by economic headwinds in Latin America and Eastern Europe. The company’s Product segment backlog stands at $1.2 billion, up from $40 million last year, driven by growth in Asia-Pacific, the Middle East, and North America, which partially offset the declines in Europe and Latin America.
Motorola’s Product segment continues to innovate and optimize cost. The company’s optimization has resulted in successfully outsourcing its Penang manufacturing operations to Sanmina and in reducing its SKU count by 40% at the end of 2015. In the last fiscal quarter, Motorola launched new products and upgraded infrastructure software that improved its capability to sell software features and licensing applications that can be important growth drivers in the future.
Services segment
Managed and Support Services grew by 7% on a constant currency basis. The services segment operating margin also improved due to improved gross margins and reduction in operating expenses. Motorola also expects its Managed and Support segment to grow in 2016. Margin improvement was driven by the completion of several large systems installation, which includes the Norway project. The services backlog stands at $5.2 billion, up by $658 million over the last year and up $601 million QoQ.
Motorola has stated that its customers continue to sign long-term services contracts to upgrade, maintain, and manage their networks. In the company’s earnings call, Chief Financial Officer Gino Bonanotte stated that “the Smart Public Safety business continues to grow with new wins and deployments led by Emergency CallWorks suite of software and services.” Bonanotte added that the company has “extended our Public Safety LTE leadership with a countrywide Public Safety LTE win in the UK with an award value of $430 million excluding any potential devices, and we’ve successfully demonstrated Public Safety LTE trials in several regions.”
Motorola has a market cap of $12.7 billion. By comparison, Cisco (CSCO), Harris Corporation (HRS), and Ericsson (ERIC) have market caps of $141 billion, $9.6 billion and $30.9 billion, respectively.
Now let’s see which region is contributing most to Motorola’s sales in 2016.
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