Shares of public safety technology provider Motorola Solutions (MSI -7.75%) were down 7% as of 12:45 p.m. ET on Friday.
While Motorola grew revenue by 6% and earnings per share by 13% — easily beating analysts’ expectations — management’s soft guidance for the upcoming quarter spooked the market.
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A harsh reaction to Motorola’s steady (as ever) results
Motorola is a leading public safety technology provider that operates through three segments: land mobile radio (LMR) communications (think of police, fire, or ambulance walkie-talkies), video security and access control, and command center solutions (911 call centers). This focus on mission-critical products makes it a steady-Eddie operator, as its solutions are unlikely to be cut from any agency’s budget.
Overall, Motorola’s first-quarter earnings looked great. The company’s largest segment, LMR, inched sales higher by 4%, while its faster-growing video and command center units saw 11% and 10% increases, respectively.
Meanwhile, Motorola’s recurring sales from software and services jumped by 9%. These sales are paramount for Motorola, as they bring higher margins than the company’s hardware products, are less cyclical, and have grown to account for roughly 40% of total revenue.
However, though management reiterated guidance for 5.5% sales growth in 2025, it projected a minute increase of 4% in Q2, prompting worries about the company reaching its full-year goals.
Furthermore, management estimated tariffs could add $100 million to its costs during the year, compared to the $11 billion in sales it expects for 2025.
Ultimately, potential tariffs and 90 days of slower growth aren’t what investors should focus on. Motorola remains a leader in the mission-critical public safety niche, a top-tier compounder, and a magnificent dividend growth stock.