* 2nd-qtr rev drops 7 pct to $1.39 bln
* Sees 3rd-qtr revenue down 7-9 pct
* Sees 3rd-qtr earnings/share $0.35-$0.41
* Shares fall as much as 5.5 pct
(Adds analyst comment, updates shares)
By Sagarika Jaisinghani
Aug 5 Motorola Solutions Inc, a maker of
walkie-talkies and radio systems, forecast a drop in sales for
the current quarter and reported a 7 percent fall in
second-quarter revenue as sales declined in North America.
The company's shares fell as much as 5.5 percent to a
three-month low on the New York Stock Exchange on Tuesday.
Government spending has hardly picked up after a "fiscal
cliff" scare led to budget cuts in the United States last year.
Accelerated purchases by state and local governments in 2012
has also been hurting demand, Chief Executive Greg Brown told
Reuters on Tuesday.
He forecast demand to pick up in the second half. "Our
Federal business will be more stable, backlog is up and the
order visibility is higher than it was a quarter ago."
Revenue will, however, reflect the increase in orders only
from the fourth quarter, Brown said.
Motorola Solutions will become more dependant on government
spending after completing the sale of its enterprise business,
which makes rugged mobile computers, tablets and barcode
scanners, to Zebra Technologies Corp.
Government and public safety systems, constituting most of
the company's remaining businesses, brought in two-thirds of
Motorola Solutions' total revenue before the sale.
The company forecast sales to drop 7-9 percent in the third
quarter ending September, implying sales of about $1.94 billion
at the midpoint of that range.
"Even if Motorola Solutions delivers a historically strong
fourth quarter, weaker results from the first three quarters
suggest our 2014 earnings forecast is unlikely to be met,"
Mizuho Securities USA analyst Matthew Hoffman wrote in a note.
Motorola Solutions, which has been cutting costs to boost
profitability, said it expects to save $300 million by the end
of 2015 - more than its targeted $200 million.
About half of the cost savings will likely come from general
and administrative cost controls, Brown said.
Operating margins shrank to 9.9 percent in the second
quarter ended June 28 from 13.6 percent a year earlier.
Total sales fell 7 percent to $1.39 billion. Sales in North
America dropped 14 percent to $841 million.
"Overall market demand in North America was down in the
first half," Brown said on a call with analysts.
The company earned 47 cents per share, excluding items.
Motorola Solutions forecast earnings of 35-41 cents per
share from continuing operations this quarter.
Chief Financial Officer Gino Bonanotte said the profit
forecast was below second-quarter levels due to a higher tax
Schaumburg, Illinois-based Motorola Solutions' shares were
down 4.9 percent at $60.91 on the New York Stock Exchange after
falling to $60.56.
(Reporting by Sagarika Jaisinghani in Bangalore; Editing by