Tech stock under pressure: Motorola Solutions Inc (NYSE: MSI)

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Motorola Solutions Inc (NYSE: MSI) stock fell over 1.9% on 31st October, 2019 (as of 10:38 am GMT-4; Source: Google finance) after posting third quarter of FY 19. Products and Systems Integration segment backlog declined by 1% or $39 million mainly due to two large system deployments in the Middle East and Africa in the prior year, which is partially offset by growth in the Americas.

The company reported 8% rise in the net income to $267 million. Operating cash flow had increased to $525 million from $338 million in the year-ago quarter mainly due to improved working capital, a settlement payment in the prior year related to a legacy business, and higher earnings. Free cash flow has increased to $465 million from $292 million in the year-ago quarter.

MSI in the third quarter of FY 19 has reported the adjusted earnings per share of $2.04, while adjusted revenue growth of 7 percent to $1.99 billion in the third quarter of FY 19. The company has ended the third quarter with backlog of $11.0 billion, which is up $1.6 billion from the year-ago quarter. Services and Software backlog has increased 26% on the back of growth in EMEA and the Americas. Moreover, during the third quarter, there has been 5% growth in the Products and Systems Integration segment and 12% growth in the Services and Software segment grew 12%. Both segments grew on the back of growth in the Americas, which was partially offset by unfavorable currency rates.

During the third quarter of 2019, the company had paid $271 million in cash and equity for the acquisition of WatchGuard Inc., paid $94 million in cash dividends, and had incurred $60 million of capital expenditures. The company during the quarter had extended the strategic partnership with Silver Lake with a new $1 billion five-year convertible note. In exchange, the company had settled the outstanding $800 million note with 5.5 million shares and $1.1 billion in cash, of which $600 million was paid subsequent to quarter-end by the company. The transaction led to an overall reduction to the diluted share count in the quarter. The company had also paid off the $400 million term loan used to acquire Avigilon during the quarter.

Motorola now expects adjusted annual profit to reach $7.77 to $7.82 a share and revenue to increase 7.25% to 7.5%, compared with its earlier view of $7.67 to $7.77 a share and revenue to grow 7% to 7.5%.

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