10-QPeriod: Q2 FY2010

Motorola Solutions, Inc. Quarterly Report for Q2 Ended Apr 3, 2010

Filed May 4, 2010For Securities:MSI

Summary

Motorola, Inc. reported a net earning of $69 million for the first quarter of 2010, a significant turnaround from a net loss of $231 million in the same period of 2009. This improvement was driven by a substantial increase in gross margin, primarily due to favorable product mix in the Mobile Devices segment and cost reduction initiatives across various segments. Revenue for the quarter was $5.0 billion, a 6% decrease year-over-year, impacted by declines in the Home and Mobile Devices segments, partially offset by growth in Enterprise Mobility Solutions. The company continues to prepare for its planned separation into two independent publicly traded companies, targeting completion in the first quarter of 2011. This strategic move aims to unlock value by creating more focused entities. Management highlighted increased operating cash flow of $485 million, a significant improvement from the prior year, underscoring operational efficiency gains and improved working capital management.

Financial Highlights

49 data points
Beta

Revenue

$1.67B

49.3% Gross Margin

Net Income

$69.00M

4.1% Net Margin

EPS (Diluted)

$0.21

Total Assets

$25.26B

Cash & Equivalents

$3.19B

Free Cash Flow

$59.00M

Financial Statements
Beta
Revenue$1.67B
Cost of Revenue$848.00M
Gross Profit$825.00M
R&D Expenses$247.00M
SG&A Expenses$446.00M
Operating Income$111.00M
Interest Expense$60.00M
Net Income$69.00M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)330.80M
Shares Outstanding (Diluted)334.50M

Key Highlights

  • 1Net earnings of $69 million, a significant improvement from a net loss of $231 million in Q1 2009.
  • 2Revenue of $5.0 billion, down 6% year-over-year, with mixed segment performance.
  • 3Gross margin improved to 35.4% from 27.9% in the prior year, driven by product mix and cost efficiencies.
  • 4Operating cash flow was positive at $485 million, a substantial increase from negative $1.0 billion in Q1 2009.
  • 5Company is on track for its planned separation into two independent companies in Q1 2011.
  • 6Mobile Devices segment saw a 9% revenue decline but an improved operating loss due to higher ASP and cost controls.
  • 7Enterprise Mobility Solutions segment reported a 6% increase in revenue and a 114% increase in operating earnings.

Frequently Asked Questions

Motorola reported a net earning of $69 million ($0.03 per diluted share) for the first quarter of 2010, a substantial improvement compared to a net loss of $231 million ($0.10 per diluted share) in the same period of 2009. Net sales were $5.0 billion, down 6% from $5.4 billion in the prior year, reflecting segment-specific performance variations.

Motorola announced an updated plan to separate into two independent, publicly traded companies, targeting completion in the first quarter of 2011. One company will comprise the Mobile Devices and Home businesses, and the other will combine the Enterprise Mobility Solutions and Networks businesses. This separation is intended to unlock shareholder value.

The Mobile Devices segment's net sales decreased by 9% but saw an improved operating loss due to higher average selling prices and cost controls. The Home segment experienced an 18% revenue decline. The Enterprise Mobility Solutions segment showed positive momentum with a 6% increase in net sales and a significant jump in operating earnings. The Networks segment's net sales decreased by 7%.

Motorola generated $485 million in cash from operating activities during the first quarter of 2010, a strong improvement from the $1.0 billion used in operating activities in the first quarter of 2009. This was driven by improved working capital management, including a decrease in accounts receivable.