10-QPeriod: Q3 FY2009

Motorola Solutions, Inc. Quarterly Report for Q3 Ended Jul 4, 2009

Filed August 4, 2009For Securities:MSI

Summary

Motorola, Inc. reported a significant year-over-year decline in net sales for the second quarter and first half of 2009, reflecting the challenging global economic environment. Net sales for Q2 2009 were $5.5 billion, down 32% from $8.1 billion in Q2 2008. The Mobile Devices segment experienced the steepest decline, with sales down 45% in Q2, largely due to a 47% drop in unit shipments. Despite lower sales, the company managed to achieve a slight increase in operating earnings to $10 million for the quarter, a slight improvement from $5 million in the prior year's quarter. However, the first half of 2009 saw a substantial net loss of $205 million attributable to common shareholders, compared to a loss of $190 million in the same period last year. The company is actively engaged in cost-reduction initiatives across all segments, with a particular focus on the Mobile Devices business. These efforts are aimed at improving long-term profitability. Motorola also completed the sale of two businesses, Good Technology and its biometrics unit, during the first half of the year, resulting in a gain from discontinued operations. Liquidity remains a focus, with the company holding $2.9 billion in cash and cash equivalents as of July 4, 2009.

Financial Highlights

52 data points
Beta

Revenue

$4.34B

33.2% Gross Margin

Net Income

$26.00M

0.6% Net Margin

EPS (Diluted)

$0.04

Total Assets

$25.10B

Cash & Equivalents

$2.88B

Free Cash Flow

$150.00M

Financial Statements
Beta
Revenue$4.34B
Cost of Revenue$2.90B
Gross Profit$1.44B
R&D Expenses$621.00M
SG&A Expenses$718.00M
Operating Income-$11.00M
Interest Expense$49.00M
Net Income$26.00M
EPS (Basic)$0.04
EPS (Diluted)$0.04
Shares Outstanding (Basic)2.29B
Shares Outstanding (Diluted)2.31B

Key Highlights

  • 1Net sales declined significantly by 32% year-over-year to $5.5 billion in Q2 2009, driven by a broad economic downturn impacting all business segments.
  • 2The Mobile Devices segment saw sales plummet by 45% in Q2 2009, primarily due to a 47% decrease in unit shipments.
  • 3Despite declining sales, operating earnings slightly increased to $10 million in Q2 2009, up from $5 million in Q2 2008.
  • 4The company incurred a net loss of $205 million for the first six months of 2009, an increase from a loss of $190 million in the comparable period of 2008.
  • 5Motorola completed the divestiture of two businesses (Good Technology and biometrics) in the first half of 2009, resulting in a gain from discontinued operations.
  • 6Significant cost-reduction initiatives are underway, particularly within the Mobile Devices segment, to drive long-term profitability.
  • 7The company maintained a strong liquidity position with $2.9 billion in cash and cash equivalents as of July 4, 2009.

Frequently Asked Questions

The primary driver for the decline in Motorola's net sales was the challenging global economic environment, which led to reduced customer demand across all its business segments, particularly in the Mobile Devices segment.

Motorola focused on aggressive cost-reduction initiatives across its business segments, including SG&A and R&D expenses, and improved gross margin percentages in some areas. These measures helped offset some of the impact of lower sales, leading to a slight increase in operating earnings in Q2 2009 despite the revenue decline.

The Mobile Devices segment experienced a significant decline in sales and an operating loss. The Home and Networks Mobility segment saw decreased sales and operating earnings, while the Enterprise Mobility Solutions segment also reported lower net sales and operating earnings, though it remained profitable.

In the first half of 2009, Motorola completed the sale of two businesses: Good Technology and its biometrics business. These sales resulted in a gain from discontinued operations, contributing positively to the company's earnings for the period.