Motorola CEO Confirms FirstNet RFP Participation, Discusses Financial Results
Tuesday, February 23, 2016 | Comments

Motorola Solutions Chairman and CEO Greg Brown said the public-safety equipment supplier will participate in the First Responder Network Authority (FirstNet) request for proposals (RFP).

“We plan on participating,” Brown said. “We view LTE (Long Term Evolution) and FirstNet to be additive to our LMR business.”

Brown did not elaborate on how the vendor would participate or what companies it might team with on the RFP. The comments came during the question and answer portion of Motorola’s earnings conference call Feb. 22.

Brown also said during the call discussing the company’s fourth quarter and full-year 2015 financial results that it extended its U.K. TETRA contracts through 2019. He said the company is “thrilled with the acquisition of Airwave strategically and financially.” He said as part of the negotiations, the company resolved all disputes, and all TETRA contracts with the U.K. Home Office are extended through the end of 2019. Previously, some TETRA contracts were set to expire beginning in mid-2017.

The company will see just less than $2 billion in backlog through the extension of the contracts through the end of 2019, he said. Motorola also won the $430 million Lot 2 contract for the U.K. Emergency Services Network (ESN), which is planned to replace the country’s nationwide TETRA network.

“We will work with the Home Office as we transition and have complementary networks co-exist and work closely with the customer on ESN at some point in the future,” Brown said.

Motorola reported fourth quarter sales of $1.7 billion, down 8 percent, including $54 million of unfavorable foreign currency impact. The company generated $414 million in operating cash flow in the quarter and $1 billion for the full year. Motorola generated $370 million in free cash flow and $830 million for the full year.

“The fourth quarter capped off a year of disciplined execution from our team with strong earnings growth and cash flow performance,” Brown said. “We grew in North America and grew in managed and support services across all regions while increasing backlog by nearly $700 million. Additionally, we achieved more than $200 million in structural cost savings and returned $3.5 billion of capital to shareholders.”

The quarterly revenue results reflect a 1 percent decline in North America, or flat when excluding the impact of currency. Overall company product sales declined 10 percent due primarily to weakness in Latin America and Europe. The services business declined 3 percent because of currency headwinds, lower iDEN revenue and a decline in systems integration revenues in Norway.

Norway launched its nationwide TETRA public-safety network at the end of 2015.

Motorola returned $239 million to shareholders in share repurchase and dividends in the fourth quarter and $3.5 billion for the full year.

Full-year 2015 sales decreased 3 percent, including $201 million of unfavorable foreign currency impact. These results reflect 3 percent growth in North America, which delivered improvements in both products and services sales in state and local governments. Overall company product sales declined 3 percent because of currency headwinds and weakness in Latin America and Europe. The services business declined 3 percent primarily because of currency headwinds, lower iDEN revenue and a decline in systems integration revenues in Norway.

Motorola cited contracts for $170 million covering four separate U.S. statewide networks to provide both network upgrades and managed and support services over multiyear periods during the year. In addition, the company won a $21 million smart public-safety contract with the Royal Malaysia Police enabling the integration of CAD, video management, command and control center dispatch, and equipping police cars with video systems to enable dispatch with situational awareness.

Motorola also said it released a new Project 25 (P25) software upgrade, Software Defined Core, enabling customers to more easily add features, software updates and licensing capabilities. The company also introduced next-generation technology that extends MOTOTRBO capabilities and complies with the Digital Mobile Radio (DMR) Tier 3 standard.

For the 2016 first quarter, Motorola Solutions expects a revenue decline of 4 to 6 percent compared with the first quarter of 2015. This assumes a $20 million unfavorable currency impact and includes about $55 million in revenues associated with the Airwave acquisition. The company expects full-year 2016 revenue to increase 5 to 7 percent compared with 2015. This assumes a $60 million unfavorable currency impact. The company’s outlook assumes growth in North America and contraction in Europe and Latin America, including iDEN revenues. This revenue outlook includes about $450 million in revenues associated with the Airwave acquisition.

“Our LMR franchise remains rock solid,” Brown said. “We have won the four largest LTE public-safety awards valued at over $800 million. We continue to incorporate more software and services into our business. I feel confident we are building a stronger and more competitive company … that is well positioned for the future.”

Brown said North America represents two-thirds of the company’s business and had a strong 2015 for backlog, and he expects the region to be strong in 2016. He expects Latin American sales to decline in the first half of 2016 and then normalize for the balance of the year. European revenues are expected to be up with the Airwave acquisition. Asia Pacific is predicted to be flat, with China down.

Brown said LTE revenue was about $130 million in 2015, a little higher than projected. With four LTE contracts — the Los Angeles Regional Interoperable Communications System (LA-RICS), two in the Middle East and the U.K. ESN — 2016 LTE revenue is expected to be comparable to 2015.

“I think given our incumbency and our public-safety expertise, we are in an ideal position to provide interoperability for LMR and LTE,” he said.

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