MSI Lags Earnings, Cuts View

Before the opening bell, Motorola Solutions Inc. (MSI) reported weaker results for the first quarter of 2013, with both the top and the bottom lines missing the Zacks Consensus Estimate. The company has also reduced its revenue outlook due to sluggish growth in the Government segment.

Fourth-Quarter Results in Details

Quarterly GAAP net income from continuing operations was $ 192 million or 68 cents per share compared with $ 159 million or 50 cents per share in the prior-year quarter.

Adjusted EPS of 55 cents in the quarter was just below the Zacks Consensus Estimate of 56 cents. Quarterly total revenue was $ 1,973 million, up 1% year over year, but was below the Zacks Consensus Estimate of $ 2,055 million.

Quarterly gross margin was 48.4% compared with 49.7% in the prior-year quarter. Operating income in the reported quarter was $ 216 million, down by 6.9% year over year. Quarterly operating margin was 10.9% versus 11.9% in the prior-year quarter. During the first quarter of 2013, Motorola Solutions repurchased shares worth $ 357 million.

During the quarter, Motorola Solutions generated negative $ 31 million in cash from operations compared with $ 69 million in the year-ago quarter. Quarterly free cash flow (operating cash flow less capital expenditure) was negative $ 77 million compared with a $ 20 million in the prior-year quarter.

At the end of the first quarter of fiscal 2013, Motorola Solutions had $ 3,718 million in cash, cash equivalents and marketable securities against $ 3,603 million at the end of fiscal 2012. Total debt at the end of the quarter was $ 2,450 million compared with $ 1,859 million at the end of fiscal 2012. Debt-to-capitalization ratio at the end of the reported quarter was 0.44 compared with 0.36 at the end of fiscal 2012.

Government Segment

Quarterly total revenue was $ 1,346 million, up 3% year over year. Operating income came in at $ 180 million, up 20% year over year.

EnterpriseSegment

Quarterly total revenue was $ 627 million, down 4% year over year. Operating income stood at $ 36 million, down 56% year over year.

Performance by Category

Quarterly product revenues were $ 1,381 million, down 4.4% year over year. Services revenues were $ 592 million, up 15.6% year over year. Quarterly product gross margin was 52.9% compared with 54.4% in the year-ago quarter. Services gross margin was 38% compared with 36.5% in the year-ago quarter.

Future Financial Outlook

Motorola Solutions expects the second quarter of 2013 revenues to remain the same or fall by 2% year over year. EPS from continuing operations is expected in the range of 66 cents to 71 cents.

For fiscal 2013, revenue is expected to grow by 3% to 4% year over year while Non-GAAP operating income is expected to be 18% of the total revenue.  

Other Stocks Set for Earnings Release

Some other companies in the same sector, which are about to release their financial results are Qualcomm Inc. (QCOM) and Harris Corporation (HRS).  Qualcomm will report its second-quarter 2013 results on Apr 24 while Harris will release its third-quarter 2013 results on Apr 30.

Recommendation

We believe that huge market share for public safety products, recent acquisitions and continuous order wins will consistently drive both the top and the bottom lines of the company, going forward.

However, the company is heavily dependent on government expenditures for its revenues. Approximately 65% of the total sales of Motorola Solutions are from government agencies. Therefore, we believe that a slowdown in the government expenditures owing to budgetary pressures may significantly jeopardize the company’s overall financials; hence the company has also slashed its future growth outlook. Moreover, Sprint Nextel Corp. (S) has planned to gradually phase out of iDEN network, which may act as a major setback for the company going forward.

Currently,Motorola SolutionsInc.has a Zacks Rank #2 (Buy).

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Rent-A-Center 1Q profit falls; cuts 2013 guidance

PLANO, Texas (AP) — Furniture and electronics rental company Rent-A-Center said Monday that its first-quarter net income fell, and it cut its 2013 guidance, saying that delayed tax refunds and high fuel prices meant less money in its customers’ pockets.

The company said first-quarter net income fell 11 percent to $ 46.5 million, or 80 cents per share, for the quarter that ended March 31. That was down from $ 51.9 million, or 88 cents per share, during the same period last year.

Revenue fell almost 2 percent to $ 819.3 million, from $ 835.3 million a year earlier.

Analysts surveyed by FactSet had been expecting a profit of 87 cents per share on revenue of $ 842.8 million.

Sales at stores open at least a year — a key metric in the retail business — fell 4.3 percent.

Revenue fell 8 percent in its core U.S. segment, to $ 669.6 million. It had fewer rent-to-own agreements with customers. The business was also hurt by delayed issuance of federal tax refunds, fuel prices, and higher payroll taxes. The company said that demand has gotten better in recent weeks, but it still cut its guidance.

The company said it now expects 2013 revenue to grow 3.5 percent to 5.5 percent, which would put it at $ 3.19 billion to $ 3.25 billion, based on 2012 revenue. In January it had said it expected revenue to grow 5 percent to 8 percent.

It predicted earnings per share of $ 2.95 to $ 3.10, down from an earlier forecast of $ 3.25 to $ 3.40 a share. Analysts surveyed by FactSet had been expecting a 2013 profit of $ 3.31 per share with revenue of $ 3.25 billion.

Some of that decline in its core stores was offset by rapid growth in its RAC Acceptence unit, which allows customers to get merchandise from Rent-A-Center partners without a credit check, and own it once they’ve made enough payments. Revenue in that unit jumped 45 percent to $ 127.2 million. The unit’s operating profit jumped to $ 15.9 million, from $ 2.9 million a year ago. The company said the unit now accounts for 16 percent of Rent-A-Center revenue and 20 percent of its operating profit.

Shares of Rent-A-Center Inc. had risen 46 cents to close at $ 35.90 before the results were released. They fell $ 2.35, or 6.6 percent, to $ 33.55 in extended trading.


Earnings News and Information on Yahoo! Finance

Rent-A-Center 1Q profit falls; cuts 2013 guidance

PLANO, Texas (AP) — Furniture and electronics rental company Rent-A-Center said Monday that its first-quarter net income fell, and it cut its 2013 guidance, saying that delayed tax refunds and high fuel prices meant less money in its customers’ pockets.

The company said first-quarter net income fell 11 percent to $ 46.5 million, or 80 cents per share, for the quarter that ended March 31. That was down from $ 51.9 million, or 88 cents per share, during the same period last year.

Revenue fell almost 2 percent to $ 819.3 million, from $ 835.3 million a year earlier.

Analysts surveyed by FactSet had been expecting a profit of 87 cents per share on revenue of $ 842.8 million.

Sales at stores open at least a year — a key metric in the retail business — fell 4.3 percent.

Revenue fell 8 percent in its core U.S. segment, to $ 669.6 million. It had fewer rent-to-own agreements with customers. The business was also hurt by delayed issuance of federal tax refunds, fuel prices, and higher payroll taxes. The company said that demand has gotten better in recent weeks, but it still cut its guidance.

The company said it now expects 2013 revenue to grow 3.5 percent to 5.5 percent, which would put it at $ 3.19 billion to $ 3.25 billion, based on 2012 revenue. In January it had said it expected revenue to grow 5 percent to 8 percent.

It predicted earnings per share of $ 2.95 to $ 3.10, down from an earlier forecast of $ 3.25 to $ 3.40 a share. Analysts surveyed by FactSet had been expecting a 2013 profit of $ 3.31 per share with revenue of $ 3.25 billion.

Some of that decline in its core stores was offset by rapid growth in its RAC Acceptence unit, which allows customers to get merchandise from Rent-A-Center partners without a credit check, and own it once they’ve made enough payments. Revenue in that unit jumped 45 percent to $ 127.2 million. The unit’s operating profit jumped to $ 15.9 million, from $ 2.9 million a year ago. The company said the unit now accounts for 16 percent of Rent-A-Center revenue and 20 percent of its operating profit.

Shares of Rent-A-Center Inc. had risen 46 cents to close at $ 35.90 before the results were released. They fell $ 2.35, or 6.6 percent, to $ 33.55 in extended trading.


Earnings News and Information on Yahoo! Finance

Rent-A-Center 1Q profit falls; cuts 2013 guidance

PLANO, Texas (AP) — Furniture and electronics rental company Rent-A-Center said Monday that its first-quarter net income fell, and it cut its 2013 guidance, saying that delayed tax refunds and high fuel prices meant less money in its customers’ pockets.

The company said first-quarter net income fell 11 percent to $ 46.5 million, or 80 cents per share, for the quarter that ended March 31. That was down from $ 51.9 million, or 88 cents per share, during the same period last year.

Revenue fell almost 2 percent to $ 819.3 million, from $ 835.3 million a year earlier.

Analysts surveyed by FactSet had been expecting a profit of 87 cents per share on revenue of $ 842.8 million.

Sales at stores open at least a year — a key metric in the retail business — fell 4.3 percent.

Revenue fell 8 percent in its core U.S. segment, to $ 669.6 million. It had fewer rent-to-own agreements with customers. The business was also hurt by delayed issuance of federal tax refunds, fuel prices, and higher payroll taxes. The company said that demand has gotten better in recent weeks, but it still cut its guidance.

The company said it now expects 2013 revenue to grow 3.5 percent to 5.5 percent, which would put it at $ 3.19 billion to $ 3.25 billion, based on 2012 revenue. In January it had said it expected revenue to grow 5 percent to 8 percent.

It predicted earnings per share of $ 2.95 to $ 3.10, down from an earlier forecast of $ 3.25 to $ 3.40 a share. Analysts surveyed by FactSet had been expecting a 2013 profit of $ 3.31 per share with revenue of $ 3.25 billion.

Some of that decline in its core stores was offset by rapid growth in its RAC Acceptence unit, which allows customers to get merchandise from Rent-A-Center partners without a credit check, and own it once they’ve made enough payments. Revenue in that unit jumped 45 percent to $ 127.2 million. The unit’s operating profit jumped to $ 15.9 million, from $ 2.9 million a year ago. The company said the unit now accounts for 16 percent of Rent-A-Center revenue and 20 percent of its operating profit.

Shares of Rent-A-Center Inc. had risen 46 cents to close at $ 35.90 before the results were released. They fell $ 2.35, or 6.6 percent, to $ 33.55 in extended trading.


Earnings News and Information on Yahoo! Finance

Rent-A-Center 1Q profit falls; cuts 2013 guidance

PLANO, Texas (AP) — Furniture and electronics rental company Rent-A-Center said Monday that its first-quarter net income fell, and it cut its 2013 guidance, saying that delayed tax refunds and high fuel prices meant less money in its customers’ pockets.

The company said first-quarter net income fell 11 percent to $ 46.5 million, or 80 cents per share, for the quarter that ended March 31. That was down from $ 51.9 million, or 88 cents per share, during the same period last year.

Revenue fell almost 2 percent to $ 819.3 million, from $ 835.3 million a year earlier.

Analysts surveyed by FactSet had been expecting a profit of 87 cents per share on revenue of $ 842.8 million.

Sales at stores open at least a year — a key metric in the retail business — fell 4.3 percent.

Revenue fell 8 percent in its core U.S. segment, to $ 669.6 million. It had fewer rent-to-own agreements with customers. The business was also hurt by delayed issuance of federal tax refunds, fuel prices, and higher payroll taxes. The company said that demand has gotten better in recent weeks, but it still cut its guidance.

The company said it now expects 2013 revenue to grow 3.5 percent to 5.5 percent, which would put it at $ 3.19 billion to $ 3.25 billion, based on 2012 revenue. In January it had said it expected revenue to grow 5 percent to 8 percent.

It predicted earnings per share of $ 2.95 to $ 3.10, down from an earlier forecast of $ 3.25 to $ 3.40 a share. Analysts surveyed by FactSet had been expecting a 2013 profit of $ 3.31 per share with revenue of $ 3.25 billion.

Some of that decline in its core stores was offset by rapid growth in its RAC Acceptence unit, which allows customers to get merchandise from Rent-A-Center partners without a credit check, and own it once they’ve made enough payments. Revenue in that unit jumped 45 percent to $ 127.2 million. The unit’s operating profit jumped to $ 15.9 million, from $ 2.9 million a year ago. The company said the unit now accounts for 16 percent of Rent-A-Center revenue and 20 percent of its operating profit.

Shares of Rent-A-Center Inc. had risen 46 cents to close at $ 35.90 before the results were released. They fell $ 2.35, or 6.6 percent, to $ 33.55 in extended trading.


Earnings News and Information on Yahoo! Finance