Motorola Solutions boosts share buyback by another $5 billion

by Lei Xuan

Moto Buybacks

Motorola Solutions Inc. shares rose after its third-quarter earnings beat forecasts due to strong growth in Europe and Africa. The maker of walkie-talkies also expanded its share buyback program by $5 billion.

In the quarter ended Sept 27, earnings at the Schaumburg-based company fell 52 percent to $147 million, or 59 cents a diluted share, from a year-earlier profit of $307 million, or $1.16 a share. The latest per-share earnings topped the Wall Street consensus by 18 cents.

The company said earnings from continuing operations went down to 62 cents per share from $1.08 per share. Sales declined 5 percent to $1.4 billion from $1.5 billion the same quarter a year ago.

“Q3 sales were better than expected as a result of strength in the Europe and Africa region, improvement in North America and faster conversion of a number of orders that were initially projected for Q4,” said Gregory Q. Brown, chairman and CEO of Motorola Solutions, in the conference call with analysts.

Motorola Solutions’ addition of $5 billion to the company’s share repurchase program follows the receipt of $3.45 billion from the sale of its enterprise business to Zebra Technologies Corp. in October. The total amount of the company’s share repurchase program has been raised to $12 billion.

Since July 2011, the company has spent $6.4 billion in stock repurchases and has reduced its net shares outstanding by 30 percent.

After the sale of the enterprise unit, Motorola Solutions will focus on its government unit, which sells wireless communications hardware, software and services to government agencies and commercial customers. “We remain acutely focused on growing this business and optimizing our capital structure,” Brown said.

“We like management’s initiative in taking the enterprise transaction as an opportunity to rethink its operating structure,” wrote BMO Capital Markets analyst Tim Long in his research note. But he added that further cut of the company’s business would harm its future growth.

Morningstar analyst Simran Kaur wrote in a research not that the sales of Motorola’s enterprise unit “will leave a smaller yet solid operating company focused on the government vertical.”

Motorola Solutions shares rose $2.08 Tuesday, or 3.2 percent, to close at $66.76 in trading on the New York Stock Exchange.