MSI Motorola Solutions Inc

Recently, Moody’s Investor Service upgraded the credit rating of Motorola Solutions Inc. (MSI). Moody’s raised Motorola Solutions’ senior unsecured and issuer ratings to “Baa2”, indicating that the existing bonds of Motorola Solution carry moderate credit risk and may possess speculative characteristics. Simultaneously, the rating agency also raised Motorola Solutions’ short-term liquidity rating to “Prime-2” from “Prime-3”. This implies that the company’s short-term debts are mostly risk free. Moody’s declared overall ratings outlook of Motorola Solution as stable.

As per Moody’s, Motorola Solutions’ business strategy to focus only on stable government enterprises will help the company to continue solid performance. Motorola Solutions commands nearly half of the total public safety market in the U.S. The company is the largest manufacturer of barcode readers and small rugged mobile computers. Recently, the company completes the long pending sale of wireless infrastructure assets to Nokia Siemens Networks (NSN), a 50-50 joint venture between Nokia Corp. (NOK) and Siemens AG (SI), for $975 million.

Motorola Solutions reported excellent financial results in the first quarter of 2011. Quarterly gross margin was 50% compared with 49% in the prior-year quarter. The first-quarter operating income was $170 million, up 41.7% year over year. Quarterly operating margin was 9% compared with 6.9% in the year-ago quarter. For fiscal 2011, Motorola Solutions expects its revenue to grow by 4%-4.5% year over year. The first dividend is expected to be declared in late 2011.

 Motorola Solutions caters to a large set of industries including Transportation & Logistics, Hospitality, Public Safety, Retail, Wholesale Distribution, Oil & Natural Gas, Utilities, to name a few. Earlier, Standard & Poor’s Rating Services raised its corporate credit and senior unsecured ratings of Motorola Solutions to “BBB” from “BB+”. Fitch Rating also upgraded the company’s long-term issuer default rating to “BBB” from “BBB-“ and provided a stable outlook.

We maintain our long-term Neutral recommendation on Motorola Solutions. Currently, it holds a short-term Zacks #3 (Hold) Rank on the stock.

 
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