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Will Motorola Solutions’ Revenue Rise in 2016?

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Jan. 31 2017, Updated 4:35 p.m. ET

Expected revenue rise between 5% and 6%

For 2016, Motorola Solutions (MSI) is expecting a revenue rise of between 5% and 6%, with non-GAAP (generally accepted accounting principles) EPS (earnings per share) of between $4.67 and $4.72, compared to its earlier outlook of $4.45–$4.65. In 2016, its operating expenses are projected to be $1.5 billion, which would represent a fall of $120 million YoY (year-over-year).

Analysts estimate that the company will post revenue of $5.99 billion for the year that ended in December 2016, with a low estimate of $5.98 billion and a high estimate of $6.01 billion. If MSI meets analysts’ revenue estimate of $5.99 billion, it will mean a YoY rise of 5.3% over 2015.

As the above chart shows, MSI’s revenue fell 5.5% YoY in 2014 to $5.9 billion and 3.2% YoY in 2015 to $5.7 billion.

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Acquisition of Airwave will help drive revenue

In 2011, Motorola split and spun off its cell phone business, which was acquired by Google (GOOG) (GOOGL) for $12.5 billion then sold to China’s (FXI) Lenovo (LNVGY) for $2.9 billion. Although Lenovo received the patents held by Motorola, MSI still has a “perpetual-use, royalty-free use of that patent portfolio.”

Motorola Solutions is now the leading provider of public safety systems globally. In 2016, MSI announced that it had completed the acquisition of Airwave, the largest operator of public safety networks in the world. According to MSI’s CEO and chair, Greg Brown, this acquisition will enable Motorola to grow its managed and support services business significantly.

Motorola will be able to leverage Airwave’s managed service infrastructure, contact center, and operational assets beyond the United Kingdom (EWU). The acquisition will also increase MSI’s recurring revenue streams by 50% and provide it with geographic diversification and additional smart public safety applications.

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