MSI Motorola Solutions Inc

We reiterate our long-term Neutral recommendation on Motorola Solutions Inc. (MSI). The company reported excellent financial results for the first quarter of 2011. Both top line and bottom line beat the Zacks Consensus Estimates. Motorola Solutions is a market leader in the lucrative U.S. Public Safety market. While the federal budgetary pressures are anticipated to continue, state and local level agencies have become major growth drivers for the company.

We believe the company will maintain its current top-line growth in the future primarily due to an improving global economy that will sustain both government and enterprise spending. Meanwhile, management declared that it will provide guidance for the company’s cash usage and optimal capital structure strategy in July 2011.

Motorola Solutions has entered into an agreement with Verizon Wireless (VZ) to install a standard-based public safety broadband network for mission-critical operations leveraging on the nationwide LTE network of Verizon. This solution will offer public safety agencies real-time management and control, enhance nationwide roaming, and sharing of existing mobile broadband sites. Several industry researchers have estimated that the market size of Public Safety may reach $6.5 billion in 2014.

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. Motorola Solutions’ business strategy to focus only on stable government enterprises will help the company to continue its solid performance in the near future.Recently, Motorola Solutions completed the pending sale of wireless infrastructure assets to Nokia Siemens Networks, a 50-50 joint venture  between Nokia Corp. (NOK) and Siemens AG (SI) for $975 million.

 
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