10-KPeriod: FY2007

Motorola Solutions, Inc. Annual Report, Year Ended Dec 31, 2007

Filed February 28, 2008For Securities:MSI

Summary

Motorola Inc.'s 2007 Form 10-K filing reveals a challenging year, primarily driven by a significant downturn in its Mobile Devices segment. Net sales for the year decreased by 15% to $36.6 billion, largely due to a 33% drop in Mobile Devices revenue, which resulted in an operating loss for that segment. The company experienced a consolidated operating loss of $553 million, a stark contrast to the $4.1 billion operating earnings in 2006. While the Home and Networks Mobility and Enterprise Mobility Solutions segments showed growth in net sales (9% and 43% respectively), this was insufficient to offset the substantial decline in the core mobile phone business. Despite the overall financial struggles, Motorola made strategic moves, including significant acquisitions in the Home and Networks Mobility and Enterprise Mobility Solutions segments, notably the acquisition of Symbol Technologies. The company also continued its investment in research and development, though the effectiveness of these investments, particularly in the Mobile Devices segment, was called into question by declining market share. Looking ahead, Motorola announced it was evaluating strategic alternatives for its Mobile Devices business, including a potential separation, indicating a significant restructuring effort to address ongoing challenges and improve shareholder value.

Financial Statements
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Key Highlights

  • 1Consolidated net sales declined 15% year-over-year to $36.6 billion.
  • 2The Mobile Devices segment experienced a significant 33% decrease in net sales, contributing to an operating loss of $1.2 billion for the segment.
  • 3The company reported a consolidated operating loss of $553 million for the year, a substantial decrease from $4.1 billion in operating earnings in the prior year.
  • 4Enterprise Mobility Solutions segment saw strong growth with a 43% increase in net sales, largely driven by the acquisition of Symbol Technologies.
  • 5Home and Networks Mobility segment sales grew 9%, supported by strong performance in digital entertainment devices.
  • 6Motorola repurchased $3.0 billion of its common stock during 2007 as part of its ongoing share repurchase program.
  • 7The company announced it is evaluating strategic alternatives for its Mobile Devices business, potentially including a separation.

Frequently Asked Questions

The primary driver of Motorola's financial performance in 2007 was the significant underperformance of its Mobile Devices segment. This segment saw a substantial decrease in net sales and incurred an operating loss, heavily impacting the company's overall financial results.

The Home and Networks Mobility segment and the Enterprise Mobility Solutions segment demonstrated positive performance. The Home and Networks Mobility segment saw a 9% increase in net sales, while the Enterprise Mobility Solutions segment experienced a strong 43% increase in net sales, bolstered by strategic acquisitions like Symbol Technologies.

Motorola undertook several strategic actions, including completing significant acquisitions in its Home and Networks Mobility and Enterprise Mobility Solutions segments. Importantly, the company announced it was evaluating strategic and structural realignment alternatives for its Mobile Devices business, potentially leading to its separation, to address its challenges and enhance shareholder value.

Motorola's R&D expenditures increased by 8% to $4.4 billion in 2007 compared to 2006. The company stated that a strong commitment to R&D is required to drive long-term growth, with key investments focused on next-generation wireless products, applications, and services.