Motorola Gets $1 Billion From Silver Lake, Reports Profit Drop

By Lisa Beilfuss 

Motorola Solutions Inc. said Wednesday that private-equity firm Silver Lake will take a $1 billion stake in the company.

Separately, the company reported a decline in second-quarter earnings, because of a one-time gain that lifted the year-earlier period and on account of adverse foreign exchange rates.

Adjusted results beat the company's guidance.

Motorola said the Silver Lake investment will enable it to speed up growth in its smart public-safety solutions and services businesses. The company expects to complete the transaction in the third quarter.

Chicago-based Motorola Solutions is what remains of Motorola Inc., the wireless communications pioneer that has been dismantled over recent years. In 2012, Google Inc. bought Motorola Mobility for $12.5 billion, and then last year sold some of the business to China's Lenovo Group Ltd. for $2.9 billion. Last year, Motorola Solutions sold its scanner business to Zebra Technologies Corp. for $3.5 billion.

In recent quarters, strength in North America has helped offset sales declines elsewhere. And in its latest quarter, revenue from North America, which accounts for more than half of the top line, grew 5%. Meanwhile, weakness in international sales has led to overall declines in both the product and services categories.

Overall for the June quarter, the company earned $142 million, down from $824 million a year earlier. Per-share earnings fell to 68 cents from $3.22 cents. Excluding items, earnings per share increased to 68 cents from 47 cents. The year-earlier period included a $746 million gain from discontinued operations.

Revenue slipped 1.7% to $1.4 billion.

The company had guided for earnings of 51 cents to 56 cents on revenue of $1.32 billion to $1.35 billion.

Foreign exchange sliced $53 million off the top line, Motorola said. In the previous quarter, the company took a $40 million currency hit.

Motorola on Wednesday backed its full-year earnings outlook, reiterating that it expects to report $3.20 to $3.40 in profit per share this year on revenue that is flat to down 2% from a year earlier. That revenue estimate translates to roughly $5.76 billion to $5.88 billion. Analysts have predicted $3.27 in per-share profit and $5.81 billion in sales, according to Thomson Reuters.

For the current quarter, the company expects earnings of 68 cents to 73 cents a share, short of the 83 cents analysts have estimate.

Shares in the company, down about 11% this year, were inactive premarket.

Write to Lisa Beilfuss at [e-mail]

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