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updated: 5/1/2014 3:12 PM

Motorola Solutions plans more cuts, earnings show losses

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  • Motorola Solutions reported deeper than expected losses for the first quarter.

       Motorola Solutions reported deeper than expected losses for the first quarter.
    BOBCHWEDYK | Staff Photographer File Photo

  • Greg Brown

      Greg Brown

 
 

Schaumburg-based Motorola Solutions Thursday posted deeper than expected losses for its first quarter, which will result in layoffs and other cuts to save a potential $100 million this year, CEO Greg Brown said in an interview with the Daily Herald.

Sales were down about 9 percent and earnings down more than 20 percent overall for the quarter. Much of the drop came in its government unit, which makes communications equipment for police and fire departments and other government agencies. About two weeks ago, Motorola Solutions agreed to sell its enterprise unit for about $3.45 billion to Lincolnshire-based Zebra Technologies. That enterprise unit makes mobile computers, scanners and other products for the retail, transportation, logistics and manufacturing industries.

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"Despite our contractions, we still believe in the long-term growth of this company," Brown said. "We believe we are well positioned and have ample opportunity to return to growth."

Brown said strategic cuts will be in the sales, marketing and research and development areas. He declined to provide specific locations or numbers.

The company has no plans to be sold, Brown said.

"We are not interested in selling the rest of the company," Brown said. "We plan to double down on a great growth strategy for the new Motorola Solutions. It's back to the future for us with the longest running and the strongest part of the business."

Motorola now has about 21,000 employees worldwide, including about 4,000 in Illinois. After the Zebra transaction is completed later this year, Motorola will have about 16,500 employees as it transfers about 4,500 to Zebra. Then, about 3,750 will remain in Illinois.

Some of the cost savings this year will involve the close of the sale of that enterprise unit, Brown said.

In addition to the $100 million cost savings for this year, Motorola Solutions aims for an additional $100 million in cost savings over the next 18 to 24 months, Brown said.

On Thursday, Motorola Solutions' first-quarter financial results posted a profit of $127 million, or 49 cents a share, compared to $192 million, or 68 cents a share, for the same period in 2013. First-quarter sales were $1.8 billion, compared to $1.97 billion in 2013.

Brown told analysts during a conference call on Thursday that the results were below expectations due to "lower order volume in both enterprise and North American government."

Timing of government contracts and some agency delays in updating their equipment could have led to some of those losses, said Peter Wahlstrom, analyst with Chicago-based Morningstar Inc.

"It is still pretty well positioned to grow," said Wahlstrom. "But in order to achieve that potential, they need to be thoughtful on where it makes its investments and where it cuts."

Motorola Solutions had been part of the legendary Motorola Inc. until the parent company split into two separate publicly traded companies in 2011.

The other spinoff, Motorola Mobility, was later sold to Google and then to Lenovo and most recently moved its headquarters from Libertyville to downtown Chicago.

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