October 24, 2012 / 11:14 AM / 6 years ago

Motorola Solutions sees government spending boosting growth

(Reuters) - Communications gear maker Motorola Solutions Inc reported a better-than-expected quarterly profit, helped by government spending on public safety, and expects double-digit percentage growth in the business to continue through 2013.

The U.S. government has been cutting discretionary spending, hurting companies such as IBM, AT&T Inc and Xerox Corp, but has been spending on public safety, where Motorola gets a major part of its revenue.

“Government spending may move up or move down but (spending on) public safety has been quite constant and remains strong,” Chief Executive Greg Brown told Reuters.

Motorola, which dominates the two-way radio market with its land-mobile-radio systems, also makes several other public safety products including advanced video security systems.

Government business grew 12 percent in the third quarter and accounted for 65 percent of the company’s revenue last year.

Motorola, whose shares were up 4 percent early afternoon trading, also gained from a regulatory mandate to convert existing wideband two-way radio channels to narrow bands by January 1, 2013. The conversion accounted for about 3 percent of the growth in government business in the third quarter.

The company raised its full-year 2012 sales growth outlook to between 6 and 6.5 percent from the 5 to 6 percent range it forecast earlier to reflect revenue from the Psion Plc acquisition.

Psion will add about $60 million to revenue in the fourth quarter, Brown said.

However, the company forecast current-quarter earnings largely below market estimates.

The company expects fourth-quarter earnings of 98 cents to$1.03 per share from continuing operations on sales growth of 6 percent to 7 percent.

Analysts on average were expecting earnings of $1.02 per share, according to Thomson Reuters I/B/E/S.

Net income rose to $206 million, or 72 cents per share, in the third quarter, from $128 million, or 38 cents per share, a year earlier.

Excluding items, the company earned 84 cents per share from continuing operations.

Revenue rose 3 percent to $2.20 billion.

Analysts on average had expected earnings of 73 cents per share on revenue of $2.15 billion.

Motorola Solutions is not related to Motorola Mobility, the cellphone maker bought by Google Inc for $12.5 billion last year.

Shares of the Schaumburg, Illinois-based company were trading at $51.79 on the New York Stock Exchange.

Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sriraj Kalluvila

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