2nd UPDATE: Motorola Solutions 4Q Net Falls 37%, Sales Jump

Motorola Solutions Inc.'s (MSI) fourth-quarter earnings fell 37% as charges and the sale of its networks business earlier in the year masked the company's stronger-than-expected revenue growth.

The provider of public safety radios, handheld scanners and telecommunications network gear was created last year in the split of Motorola Inc., which spun off the higher-profile mobile-devices and TV-set-top-box operations into Motorola Mobility Holdings Inc. (MMI).

Motorola Solutions reported a fourth-quarter profit of $184 million, down from $292 million a year earlier, due in part to the loss of its networks business, which it sold to Nokia Siemens Networks in April for $975 million. On a per-share basis, earnings rose to 54 cents from 49 cents due to fewer shares outstanding in the most-recent quarter. Excluding items such as stock-based compensation, amortization and reorganization costs, earnings rose to 87 cents from 64 cents. Revenue jumped 5.3% to $2.3 billion.

The company said it expected sales growth to slow to 5% this year, compared with 8% in 2011. That includes an expected 4% increase in first-quarter revenue, lower than last year's 8% rise. Chief Executive Greg Brown said in an interview that the slower growth can be attributed in part to an expected decline of $70 million in revenue this year from its iDEN network business.

"We'll continue to grow our public safety product revenues, we'll continue to grow our enterprise mobile computing," said Brown. "I think public safety LTE is our biggest opportunity," he said, referring to fourth-generation networks.

Nomura Securities analyst Stuart Jeffrey said Motorola Solutions's forecast was "relatively modest" compared to prior estimates. He noted Motorola Solutions's expectation of 2012 operating earnings at 17% of sales was below analysts' forecasts.

For this year's first three months, the manufacturer said it expects between 50 cents and 55 cents a share in earnings from continuing operations, which is about the same as last year's result. Analysts surveyed by Thomson Reuters expect 56 cents a share on 3% revenue growth.

In the fourth quarter, government sales increased 6%, and the enterprise business posted a 3% jump. While North America remains Motorola Solutions's largest enterprise market, comprising 57% of that division's sales, Asia is the fastest growing, followed by Latin America. Motorola Solutions lifted enterprise revenue in those regions by 14% and 10%, respectively, compared with just 5% for North America.

Its October projection was adjusted earnings from continuing operations of 78 cents to 83 cents a share on 2% to 3% sales growth.

Gross margin rose to 50.4% from 49.8%.

Shares recently declined 4.4% to $45.75. The stock has risen 5.7% over the past three months.

--By Greg Bensinger, Dow Jones Newswires; 212-416-4676; greg.bensinger@dowjones.com

--Melodie Warner contributed to this report.

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