摩托羅拉 (MSI) 2010 Q4 法說會逐字稿

Good morning and thank you for holding.

Welcome to the Motorola Solutions fourth-quarter 2010 earnings conference call.

Today's call is being recorded.

If you have any objections, please disconnect at this time.

The presentation material and additional financial tables are currently posted on the Motorola Solutions Investor Relations website.

In addition, a replay of this call will be available approximately three hours after the conclusion of this call over the Internet.

The website address is www.motorolasolutions.com/investor.

At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation.

I would now like to introduce Shep Dunlap, Vice President of Investor Relations.

Shep, you may begin your conference.

Good morning.

Welcome to Motorola Solutions fourth-quarter results conference call.

I'm Shep Dunlap, Motorola Solutions Vice President of Investor Relations.

I worked with many of you while at my former company, Dell.

With me today are Greg Brown, President and Chief Executive Officer of Motorola Solutions; Ed Fitzpatrick, Chief Financial Officer and Mark Moon, Senior Vice President, Sales and Field Operations.

Greg and Ed will review our fourth-quarter results, and then Mark will join for the Q&A portion of the call.

We have posted our presentation and press release at motorolasolutions.com, and I encourage you to review these materials for additional perspective.

During today's call, we will briefly report Motorola Inc.'s Q4 consolidated results, the final quarter as a combined company.

We will present in detail the Motorola Solutions pro forma operating results, which primarily represents the former Enterprise Mobility segment of Motorola Inc.

All references to Motorola Solutions' financial results are pro forma with continuing operations of Enterprise and Government and exclude the discontinued operations of the Networks business.

Let me remind you, we recently filed an 8-K with pro forma GAAP results for Motorola Solutions as an independent company, which include pro forma financial results for Motorola Solutions in the first nine months of 2010.

We also recently posted to our website pro forma non-GAAP results that include historical performance and EPS for years 2008 through 2010.

In addition, when we report Q1, we will recast our results to reflect Mobility as discontinued operations, and we will provide disclosure on the new segments.

I would encourage you to review this information, which updates the previous segment disclosure on September 30 and includes the quarterly historical performance of Motorola Solutions as an independent company.

A number of forward-looking statements will be made during this presentation.

Forward-looking statements are any statements that are not historical facts.

These forward-looking statements are based on the current expectations of Motorola Solutions, and we can give no assurance that any future results or events discussed in these statements will be achieved.

Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this presentation.

I will now turn the call over to Greg.

Thanks, Shep, and welcome to Motorola Solutions, and good morning and thank you all for joining us.

On January 4 we completed our separation with both companies operating independently and trading separately on the New York Stock Exchange.

The former Motorola segments of Mobile Devices and Home are now Motorola Mobility.

Motorola Inc.

is now Motorola Solutions trading under the stock symbol MSI after completing a 1 for 7 reverse stock split.

Separation was an historic milestone in Motorola's rich history, and we're excited about our future going forward.

Motorola Solutions delivered a strong Q4.

Sales in the quarter were over $2.2 billion, up 13% from the year ago quarter.

For the full year, sales were $7.9 billion, an increase of nearly 10% from 2009.

While I'm pleased with the way we finished the year, I'm equally encouraged by our opportunities in 2011 and beyond.

So now I'm going to turn the call over to Ed Fitzpatrick to discuss our financial results and reporting changes associated with the separation.

I will then return to discuss the operational highlights and provide additional color on the business.

Ed?

Thanks, Greg.

First, before we discuss Motorola Solutions' results, let me briefly comment on the fourth quarter for consolidated Motorola.

Today we reported fourth-quarter results for the former Motorola Inc., which includes continuing operations for the EMS, Home and Mobile Devices segments and excludes the Networks business, which is in discontinued operations.

Consolidated Motorola's total Q4 sales were $5.7 billion, and non-GAAP earnings from continuing operations were $0.14 per share based on the former share count or $0.95 per share when adjusted for the reverse stock split.

Motorola Solutions' performance slightly exceeded Q4 expectations.

Total cash for consolidated Motorola ended the year at $8.9 billion, exceeding our previous outlook, driven by primarily by improved operating cash flow for Motorola Solutions.

Further details on these results can be found in our press release.

All remaining financial references on this call will be to the pro forma non-GAAP results of Motorola Solutions.

Before we get into the details on our pro forma results, I want to remind you of the impact of separation on our financials.

As we have completed the distribution of Motorola Mobility, certain operating costs, which historically were allocated to Mobility, are now being incurred solely by Motorola Solutions as the underlying activities were not transferred to Mobility.

This overhang, as we call it, is approximately $150 million on an annualized basis and primarily represents G&A, functional and US pension plan costs.

We have already begun actions to address these items, and we expect these actions to be largely completed during the first half of 2011.

Now on to Motorola Solutions performance.

Sales for the quarter grew 13% over last year, driven by growth in both our Government and Enterprise businesses and across all regions.

Sales continue to be resilient in our Government business with fourth-quarter sales of $1.5 billion, an increase of 9% from the prior year.

Full-year sales in government were $5.1 billion, an increase of 5% compared to 2009 with growth in each of the regions.

Enterprise sales grew 23% in Q4 to $772 million, while full-year sales increased 19% to $2.7 billion.

Each region in the Enterprise business achieved double-digit sales growth on a quarterly and full-year basis.

And, as a reminder, these results include our iDEN infrastructure business.

Our total backlog position is up slightly both on a sequential and year-over-year basis.

Gross margin percentage in the quarter was 50.1% compared to 51.8% in the fourth quarter last year.

The higher gross margin in the fourth quarter of 2009 was due to favorable product mix.

The full-year gross margins results were 50.2%, consistent with the prior year at 50.1%.

Operating expenses in the quarter were $773 million compared to $677 million in Q4 2009.

For the full-year 2010, operating expenses were $2.9 billion, an increase of 9% over 2009.

The increases in operating expenses are attributable to investments in R&D for next-generation Public Safety LTE, the reinstatement of our 401(k) match, pension costs and other incentives and compensation-related benefits.

Motorola Solutions pro forma non-GAAP operating margin for the fourth quarter was 15.7% compared to 17.7% in Q4 2009 as Q4 2009 gross margins benefited from favorable product mix.

The full-year operating margin was 13.8%, up from 13.6% in 2009.

Total other income and expense was a net expense of $25 million in the quarter compared to net income of $5 million in the fourth-quarter 2009.

Q4 2009 income on this statement line was driven by a reduction in interest accrual related to taxes, along with investment gains.

We have a $5.7 billion cash balance and debt outstanding of $2.7 billion.

Our cash balances are roughly 1/3 domestic and 2/3 outside the US.

Turning now to our Q1 outlook, we expect sales growth of 3% to 4% over the first quarter of 2010.

We expect operating earnings in the 11% to 12% range compared to 10% in the first quarter last year.

Our outlook is for non-GAAP earnings-per-share of $0.29 to $0.34 from continuing operations.

This compares to pro forma non-GAAP EPS in Q1 2010 of approximately $0.33 per share.

It is worth clarifying that 2010 results included a $0.04 per share gain in Sigma fund investments and foreign currency-related gains, which when adjusted equals $0.29 per share from continuing operations.

This outlook excludes stock-based compensation and intangible amortization expenses of $0.17 per share, and items historically highlighted in our quarterly earnings releases.

Our financial outlook for the full year is for sales growth of approximately 4%.

This reflects total growth of 5% to 6% offset by $100 million decline in the iDEN business.

We also expect operating margin for the full-year 2011 of approximately 16%, up from 13.9% in 2010, which underscores the operating leverage of this business.

In 2011 we expect a net interest expense range consistent with 2010 and a booked tax rate in the 35% to 37% range.

However, as we utilize available tax credits, our cash tax rate is expected to be closer to 20% for the foreseeable future.

We expect depreciation expense to be similar with 2010 levels, while capital expenditures scale with our sales growth.

Before turning the call back to Greg for a review of operations, I want to spend a couple of moments on the balance sheet.

We continue to make progress in optimizing our capital structure.

I'm pleased to report that we are now an investment-grade entity.

Earlier this year we received upgrades to solid investment-grade from two rating agencies and a review for possible upgrade from the remaining agency.

Continuing our progress in 2011, we plan to retire the $600 million of debt that comes due in November.

In addition, during the year, we plan to make the required US pension contributions up to $265 million.

And finally, we expect to close the Networks transaction in Q1.

I will now turn it over to Greg for operating highlights for the quarter.

Thank you.

Sales in our Government business accounted for 65% of total sales for the full-year 2010.

Geographically we saw growth across all regions in the government business, including an increase of 5% in North America.

We believe this growth demonstrates the prioritization and resiliency of Public Safety spending.

Helping drive this growth, we released our latest ASTRO 25 radio system infrastructure with over 50 new features.

We expanded our product offering in our latest APZ radio series with the addition of the mid-tier APX 6000 Portable and APX 6500 Mobile.

Our APX series now accounts for over one quarter of total ASTRO radio sales, reflecting strong adoption of our new products.

We also launched the new video solutions that enable Public Safety agencies to transmit and receive video on the move for greater coverage and increased officer safety and effectiveness.

Significant wins for us in the quarter include a $345 million award with the state of Maryland that includes a contract for Phase I of a new statewide Public Safety system and a $17 million ASTRO 25 radio system with SAIC to service U.S.

Customs and Border Protection.

We had several other multimillion dollar statewide awards in New Jersey, Mississippi, Louisiana, as well as Orange County in Florida.

We are building the 700 MHz LTE Public Safety network for the San Francisco Bay area, and we also won another Public Safety LTE contract for Harris County Texas for increased communications in the port region and throughout the county.

Moving to our Enterprise business, our Enterprise portfolio represented 35% of our total annual sales.

The 19% full-year growth in Enterprise sales was a result of strength across our entire product portfolio, including growth in excess of 20% in the areas of enterprise mobile computing, advanced data capture and Wireless LAN.

Although it is a new growth business, we saw even greater growth in the RFID area as the technology continues to emerge with item level inventory tracking solutions adopted by large retailers.

During the quarter, we won a $15 million award with Hermes in Germany and several multimillion dollar contracts for enterprises, including TNT Express in Holland and Bergendahls in the Nordics.

Our priority in Enterprise continues to be accelerating growth of the mobile workforce with innovative products like our newest MC55, the industry's most rugged WiFi enterprise mobile computer for managers, task workers and clinicians.

Demand for the ES400, which we began shipping globally in Q4, was strong.

This new enterprise mobile computer provides knowledge workers with enterprise grade durability and functionality for business-critical applications.

We also achieved certification from leading healthcare solution providers for our newest data capture device designed to meet the unique requirements of healthcare.

Another growing trend is digital loyalty programs among retailers, which is driving new solutions in our advanced data capture portfolio with imaging across companies like Michaels and Walgreens.

In today's competitive environment where customers often have access to the same or even in some cases better information than a store associate, real-time access to information is critical.

An example of one of our solutions to meet this requirement is our personal shopping system, which has been very successful in Europe with over five major retailers investing in the technology in Q4 alone.

We are proud to be recognized for our customers for innovation and collaboration.

Tesco, the third largest food retailer in the world, recently presented us with its 2010 Technology Partner Award.

Tesco relies on a wide range of solutions from us, including enterprise mobile computing, advanced data capture and wireless infrastructure.

During Q4 we also announced an agreement to extend Motorola Solutions' support of the Sprint iDEN network for three additional years through 2013.

This is in addition to a three-year supply agreement we announced in Q3 of last year with NII Holdings.

Finally, in January we participated in the National Retail Federation's Annual Tradeshow, which this year celebrates its 100 year anniversary.

We engaged with our top customers and displayed an array of innovative products and technologies that address the entire spectrum of enterprise mobility needs for retail.

While at the show, we announced a new hands-free presentation imager designed for both hands-free and handheld scanning to read 1-D and 2-D barcodes on paper or on a mobile phone and launched the MC3190, the smallest and lightest business-class RFID handheld available on the market.

In closing, our fourth-quarter and full-year results demonstrated growth and resiliency in our government business.

Strong growth in the enterprise, and we finished the year with an ending backlog position that was up slightly.

With separation now complete, we have begun a new future with a sharpened, strategic and operational focus that is clear and purpose-driven.

I want to thank all of our employees for their unrelenting work and dedication in getting us to where we are now.

We are committed to driving profitable growth, further optimizing our cost structure and improving cash flow.

Our time, talent and resources are fully dedicated to executing on our financial plan and delivering the mission and business-critical solutions that solve the unique challenges faced by Public Safety, government and enterprise customers around the globe.

Thanks, Greg.

Before we begin taking questions, we want to remind callers to limit themselves to one question and one follow-up so that we can accommodate as many participants as possible.

Operator, please instruct our callers on how to ask a question.

(Operator Instructions).

Tavis McCourt, Morgan Keegan.

My question is related to the sale of the Networks business.

Obviously you still expect an early 2011 close for that.

How much net cash do you intend to take in with that, and will that be held internationally or in the US?

And then my clarification is on the growth rates for Q4, which were obviously quite superior to what we were looking for, do those include the iDEN infrastructure business and the comp from the year ago period?

So on the second question first, our 23% Q4 Enterprise growth does include iDEN infrastructure.

If you were to normalize for it extracted, it does not change the material growth rate at all for the quarter.

So it was strong.

With or without iDEN infrastructure, it is worth noting.

On the network sale, we are still anticipating a close in Q1.

Net of taxes we think the net proceeds will be approximately $1.1 billion.

We believe the majority of that will be US-based.

And, as we have said, after we close that transaction, we will have opportunities to consider a number of different things in terms of capital allocation and the deployment within the context of closing that transaction.

Deepak Sitaraman, Credit Suisse.

A question for Greg.

Greg, as it relates to your guidance for revenue growth for 2011, can you help us understand how we should think about Government versus Enterprise?

I guess even if we assume that Government grows in the low single digits, it seems to imply a deceleration in Enterprise for 2011.

First of all, is that the right way to think about it, and does this mean that for Enterprise, we're in a more normal cyclical environment versus what we saw in 2010?

So you can think we are saying all-in topline revenue growth of approximately 4%.

Remember that includes the iDEN infrastructure business, which is declining about $100 million from 2010 to 2011.

If you were to normalize for that, that takes the core growth rate for the business to about 5% to 6%, which is in line with the guidance we talked about operating within our financial model back at the financial analyst meeting in November in New York.

To your point, as we think about that, we are contemplating a mix of low single-digit growth in Enterprise and high single-digit growth -- excuse me, low single-digit growth in government and high single-digit growth in Enterprise, which is the composition that we are thinking about that goes into the overall forecast of approximately 4%.

2010 was a very good year, and Enterprise we still believe in will continue to grow strongly.

We also believe that perhaps 2010's strong growth in part was a bit of a snapback from CapEx spending that was either chilled or restricted as Fortune 500 or Fortune 1000 firms were coming out of the deep economic recession.

So that is the thinking in the guidance.

Okay.

That is very helpful, Greg.

And just a follow-up for Ed.

In terms of the capital structure, I guess when do you expect to be at the optimal capital structure, and at what point can we expect to hear about uses of cash as it relates to returning cash to shareholders?

So we do expect to make progress throughout this year on the capital structure as we mentioned.

We will be paying down the debt that comes due in the fourth quarter this year, as well as making the required pension contributions and, as we talked about, growing operating earnings.

We do expect to make great progress during the year.

I will let Greg comment on the capital allocation and when we would expect to come back to you with what we are considering in that regard, but a key is going to be ensuring that we are making progress on the debt to EBITDA-related ratios that we have talked about.

And we have said that we do recognize the opportunities to improve the efficiency of the balance sheet.

Obviously we wanted to get separation completed.

That is done.

We wanted to establish solid investment grade ratings.

That is done with two of the three agencies.

As was referenced, we have the pending transaction later this quarter is what we are targeting for Networks.

So I think when you take all those ingredients into the mix, there will certainly be opportunities for us to look at further improving the balance sheet, and returning capital to shareholders will be given full consideration.

Brian Modoff, Deutsche Bank.

Greg, a question for you.

So you talk about low single-digit growth in the SMR business.

What could you see that would create a higher trend for that this year?

What would be the drivers?

Really just government spending budgets, or is there a technological upgrade that you think could start to accelerate the growth in that business, not just this year but into the future?

Thanks.

I think there's a couple of things Brian actually.

So, in addition to what we consider the consistent drumbeat of Public Safety infrastructure upgrades, there are also some structural things going on.

There is a narrow-band initiative in the US that says after 2012, all radios procured in the US need to be digital.

We think that that structural migration -- and there is still a lot of analog radios out in the field, a lot in the installed base -- will provide a structural incentive for technology refresh that we should be a beneficiary of.

The second big one is Public Safety LTE.

We referenced that we won an award in San Francisco Bay RICS.

We also announced today we won a second award in Harris County, Texas.

As I have mentioned and as we talked about before, Public Safety LTE is about video, and it's about high-speed data.

We think of that business and the LTE opportunities as incremental to our core growth.

And with two wins behind us and networks being built out, we see that as a significant opportunity in front of us.

And we mentioned a couple of months ago in New York they already have over 1 billion of opportunities in the funnel lifecycle value for LTE opportunities both in the US and some international as well that we think we will continue to grow.

So, in addition to the prioritization and criticality of Public Safety, which I think will continue to march forward and is demonstrated by our Q4 growth of 5% in North America, then you think about the narrowband structural update in the US, you think about the march toward Public Safety broadband or Public Safety LTE driven and led by the US; there is a number of things that I think are conducive for us to continue to grow.

And Greg, can you remind us of what percent of the installed base is analog radios on a global basis?

You know, I know that in our professional -- so when I make that characterization, I'm referring to both installed base Public Safety infrastructure, but also what we call our PCR business, our Professional Commercial Radio business.

In the Professional and Commercial Radio globally, it is overwhelmingly analog.

It is over 90% analog, and less than 10% is digital.

So the refresh opportunity on the PCR side is high.

On Public Safety, I'm not sure of the exact mix, but I know there is opportunity as well.

Ehud Gelblum, Morgan Stanley.

A couple of quick questions.

First of all, given the mix that you are talking about in the growth rates between Government and Enterprise for next year, is there a margin differential?

I would imagine that the government has a higher margin than Enterprise, and I just wanted to ascertain if that is right as we kind of look at the margin profile throughout the year.

And then as you start in the year at 10% to 11%, we have to -- which is basically where you were last year in Q1, I think at 10.2%, we have to ramp this throughout the year at a faster rate than last year.

So we end up around 16% according to your prior guidance versus 14%.

How should we be looking at that ramp, and what is the exit point that we get to in Q4 on margin?

So on gross margin, the gross margin profile of the Government segment and Enterprise segments are actually relatively comparable.

There is not a significant difference at the gross margin level.

To your point on Q1 guidance on operating margin of 11% to 12%, that will be up from 10.1% or 10.2% from a year ago.

So nice operating leverage flow-through Q1 of 2011 over Q1 2010, which is reflective of this business and the balance sheet and the structure of our cost structure, which we like.

It also reflects to your point linearity that is relatively normal.

I think that as Motorola Solutions comes out and we guide you, we have obviously guided you to the full year of approximately 4% topline and approximately 16% operating margin for the full year.

We will then walk you through an update quarter by quarter, but the business, as you know, is usually -- its lowest quarter is Q1, its strongest quarter is Q4, so we will do as good a job as we possibly can on walking you through the linearity, and at the end of the Q1 earnings call, update Q2 and so on and so forth.

But I would characterize the contribution of the 2011 plan as we look at it as generally in line with historical linearity of previous periods.

And I will add to that, I think you're right.

As we plan for it throughout the year each quarter, we looked at chilling improvements in each quarter, operating earnings as a percent of sales.

So that is -- it is not by accident we are driving it that way.

I think you are right.

Q4 is the best quarter, but Q4 was the best quarter this year, and it will be next year as well.

So we expect it to be relatively showing improvement each quarter as we go throughout the year.

Right.

I understand the Q1 guidance of 4% is kind of in line with your full-year guidance, but it turns out that the quarter-over-quarter sequential in the Q1 is down 20% or so at the midpoint versus last year it was down 12%.

Can you just go over what the puts and takes of why optically it looks like that?

And then the $1.1 billion in cash that you are receiving from the sale of NSN, is that versus the $1.2 billion sale rate or the $1.35 billion that includes the $150 million in receivables that you are also --?

So on the Networks transaction, think of the $1.1 billion as the net proceeds from $1.2 billion.

The receivables of $150 million are incremental to that.

So we were just taking the $1.2 billion announced sales price and netting it of tax and taking the $1.1 billion.

On the growth rate being down in Q1 sequentially versus the previous period, I mean it is what it is.

The math is clearly right as you have articulated.

I would not read too much into it.

I think it is important as we launch the firm that we deliver on what we say we are going to deliver on and we show a consistency and a cadence of solid performance and, as Ed talked about, very important quarter by quarter operating margin expansion to the extent we can do that.

So we are not only growing topline, but we are getting to the 16%, but doing it in a consistent way to where we are expanding the operating margins on the bottom quarter by quarter.

And we will see how the quarter goes.

Remember also that backlog is up slightly, which I think is also a good reflection of the importance of what we do and how both the high ROI for Government and Public Safety, but the high ROI yield for the Enterprise portfolio, as well as corporate customers, are looking to improve productivity as well.

The only thing I would add to that on the growth rates is, if you look at 9 to 10 growth rates approximately in that same range, 3% to 4% 2011, 3% to 4%, again, it just speaks to the level of business that we do in Q1 historically.

(Operator Instructions).

Avi Silver, CLSA.

Greg, can you talk about the FCC's latest interoperability order from Tuesday?

And related to interoperability and LTE, what kind of support does that have in Congress and how the dynamics of a split Congress affect that and what that could mean for MSI?

Well, I don't know the details of it, but I do know from the product management people that, as the FCC thinks about an LTE architecture for Public Safety and then, as you reference, they contemplate interoperability between Public Safety networks and carrier networks, I know that it is consistent with our thinking as well as we architect both infrastructure and subscribers for an LTE solution.

So remember, as we think about Public Safety LTE, these are private networks, so obviously they are not carrier-based.

They are dedicated to the customers.

The spectrum is dedicated to the customers.

And the solution, both infrastructure, radio subscriber and the software feature functionality is customized to whether it is San Francisco or Harris County, and it is a private network.

As first responders in this case roam beyond the coverage area of a Public Safety LTE network, the FCC has to contemplate what is the interoperability between requisite 4G networks, private and public for Public Safety and carrier.

My understanding is that interoperability and what they are talking about and thinking about is generally consistent with our architecture as well.

So we view it as positive.

Okay.

And if I could just ask a follow-up on this litigation with Huawei, what exactly do they want?

Can they actually drag this on beyond Q1?

Is there a scenario that that could happen?

Well, you would have to talk to them about what their intentions are.

I would not speculate.

I would say that I think that the Huawei lawsuit is completely without merit, and I also believe their legal maneuvering is not a surprise.

That said, we are continuing to move forward.

We have received approval for the Networks transaction in all jurisdictions around the world and are awaiting final approval from the Chinese antitrust authorities, which we are planning for in Q1.

Larry Harris, CL King.

I guess a couple of questions.

With respect to LTE, I'm assuming that the revenue contribution in 2011 would be fairly nominal, but could we see a step function, say, in 2012 that would allow the business, the government business, to see a much higher rate of growth?

So I would be careful to comment on 2012, but your characterization in 2011 is correct.

I don't think -- we are not expecting material revenue contribution from LTE in 2011.

Having said that, we are looking to book and close orders this year, two of which are behind us.

We will look to close other opportunities that will begin to make a more meaningful contribution to your point in 2012 and beyond.

Okay.

And then in terms of the Enterprise area, any additional commentary that you can supply relative to various industry sectors, say, retail versus, say, transportation and logistics?

Are there particular areas where you are seeing greater strength in terms of orders?

Actually, Larry, you hit them both.

The strongest ones are retail and transportation and logistics.

But retail has been stronger than we thought it would be in 2010.

And the growth has been not only strong topline, but pretty consistent throughout our product portfolio.

So people are deploying next-generation enterprise mobile computing.

They are deploying next-generation advanced data capture.

Our Enterprise Wireless LAN business had, I think, one of its best years of growth in 2010 ever.

So it is pretty consistent through the portfolio.

And I like the fact obviously that it is led by retail, which I think has maybe a more significant barometer on the overall macroeconomic in general.

We were at the NRF, or the National Retail Federation, show in New York earlier this month, and I like to gauge the pulse, the attendance, the energy.

And I thought that it was generally good, but when we got to our booth, I could not believe it.

We could barely move literally as we showed the not just device, but the application, back office integration and the partnership linkages as well with different warehouse logistics, store operations.

It was really well received, and we are very pleased with the way that business is going.

Jeff Kvaal, Barclays Capital.

This is a bit of a broader question.

But I think for many of us who were initially starting the coverage of Motorola Solutions, our estimates started out a little bit higher than where they were post your filing, and then it looks like they are coming down a little bit again.

I was wondering if you could shed a little on the timing of when things started to shift for you in the end markets and why you put out the pro forma results later in the process rather than earlier?

Some thoughts around that would be very helpful.

Well, I think taking your second question and I will let Ed jump in as well, but we put out that pro forma.

Obviously we have had separation going.

Second, we have had the discontinued operations associated with the Networks planned transaction.

And then third, obviously filing the pro forma MSI financials, which we did on the 11th of January associated with the spin of Mobility.

So I would not characterize it from my view as taking anything down.

It is working through the process of filing the appropriate paperwork and financials to get clarity around this segment.

We have had a lot of moving parts, but certainly my sense and my sentiment is not going down, and I think it is consistent with what we said in November both around topline growth, and it is consistent around the operating margin we guided to you on the 16%, entirely consistent two months later, the gross margin profile being comparable for both segments.

And with the strong Q4 performance in Government and Enterprise but most notably government and North American government, which I know was a big concern last quarter and backlog being up slightly, we certainly are not meaning to have it interpreted that sentiment is going negative or going the wrong way.

We are feeling very good about the business and the momentum.

Maybe Ed can talk about the timing of the filing of the SEC and the financial documents.

I think Greg is exactly right.

When we went out on the road and did the financial analysts meeting, what we expected at that point in time nothing has changed.

In fact, the guidance that we gave you the day effectively reiterated what we said during the analyst meetings and the investor meetings that we had.

So nothing has really changed.

In fact, we actually feel probably even more bullish given, as Greg talked about, the Q4 results and the resiliency of the business.

So we feel good about what we have talked about with the guidance, and we will, as we talked about, file an 8-K coming up as we get ready to report the Q1 earnings with a full recast at Motorola Solutions results with the Mobility results in discontinued operations.

So stay tuned for that.

Okay.

I guess you all have had your hands full with a lot of different filings and what have you, but I guess would it have been possible to get the MSI pro forma out earlier in the process?

I think we filed -- as we talked about, we filed the Q1 to Q3 related results of 2010 in prior periods earlier this month about as early as we could do it.

And, as you know, we just closed the books on Q4.

So once we get that finalized, we will come out later this quarter with the results, the full-year results recasted with the discontinued operations.

Jim Suva, Citi.

Congratulations to you and your team.

The question I have is you laid out a bunch of new wins.

Is it possible, is there like an average timeline contract for these wins or average revenues per year?

What I'm trying to wonder, is it possible to layer on the new business you are winning and then compare that to what is rolling off the time things typically rolloff?

And then the second part of that question is, how do we think about when we start to see whether it be in California or in New Jersey or New York, some of the different departments such as police and the fire areas looking at actually reducing their fire and safety employee base?

I understand there are contracts that are long term in nature, but one has to think about how we should think about the impact about going from a base of, say, 500 firemen to 400 firemen, and you would think they would need less radios.

So let's take the second question first.

Even in the difficult challenging government spending environment you described, I think Public Safety at least historically has continued to bubble to the top from a priority standpoint.

If you then take it a step further, Jim, as you described, even in areas where first responders are being reduced, what we are seeing so far is spinning around Public Safety remaining relatively constant.

I think part of the reason for that is we sell more than just radios.

So we sell video surveillance infrastructure.

We have integrated command and control and dispatch functionality.

So if you think about it, government and Public Safety needs a high return on investment just like the enterprise does.

And what we see is that the ROI calculation, even in headcount-challenged environments within Public Safety forces and departments, also gets a high priority that has so far proven itself to be resilient and reflected overall in the constancy and spend.

In terms of the individual deals, I think it is a little too difficult to take each one, layer it, de-layer it, roll it off.

I think a more meaningful set of metrics for you to think about is not only the guidance we give for the quarter -- and in this case, the context of the full year -- but also backlog.

And the fact that backlog is up slightly after a very strong Q4 both in Government and Enterprise is notable.

And kind of back to Ehud's point, a couple of questions ago when maybe the growth rate year over year Q1 to Q1 is less than what we think, also it takes into account a very strong Q4.

I think that you have to look at the composition of all of the metrics, year-over-year growth, full year, and then backlog to give you the dimensions I think of the robustness of the whole portfolio and the way to think about growth for the firm.

Thank you and congratulations to you and your team.

Edward Snyder, Charter Equity Research.

Greg, a couple of questions.

The answer you just gave regarding downsizing and Public Safety, it sounds like -- correct me, if I'm wrong here -- that most of your forecasting is a top-down type enterprise.

Given so many different contracts, it is difficult to track everything.

Is it fair to say that given historical trends, especially in Public Safety and the Government side of the business, that you look at implied growth rates from a year ago or so and use that to estimate it and then backfill whatever big contracts you had to see if your backlog is moving up sufficiently?

Actually I would characterize our forecasting as bottoms up, not top-down.

I think we build it up.

We look at it starting with backlog.

We then layer on services, which we don't talk enough about, that is in the pipeline that we believe will be revenue recognition within the quarter and for the period.

We overlay that against what we would characterize a baseline level of growth print, our PCR, or Professional Commercial Radio business, and then we look at the necessary business that we call quick-turn that we've got to sell and close and book in the quarter.

So I would definitely not characterize our forecasting as top-down.

It is a bottoms up build both by technology platform and by region.

We do go through in painful detail the individual contracts and do our best to in aggregate calculate where we are and where we need to be.

Okay.

So given that then, it would be safe to assume that you would have to see changes in contracts or notification from customers that whatever -- however they want to characterize it to you has been altered before you would materially alter your forecast versus, say, all the chatter coming out of the legislatures for both the local and the federal government of some of the big changes people are looking at in terms of budgeting?

What I'm trying to get to is, what do we key on to get a long-term full idea of your growth rate?

We don't have access to those contracts, and it certainly seems like sentiment is changing both on the local and the federal level on spending.

I know public safety is probably more insulated than most, but there is always a lot of hot-air coming out of Washington.

But to the extent that it actually wanted to be coming action, we could see a dislocation in historic trends in a big way.

I'm just trying to get an idea of in terms of forecasting what is the best way to key on that?

So I would say two things.

Remember, also, in November we have always talked about topline revenue growth with the goalpost of 5% to 8%, and our goal is to operate on topline within that spectrum of growth.

When you normalize for our iDEN infrastructure business, we are within the goalpost for that for 2011.

And we talked about that 5% to 8% growth being reflective of our core business, what we believe to be sustainable growth targets for a three-year period.

But the other dimension to your question is you are right.

With a long cycle sell business, we have greater visibility than some other businesses into some of the dynamics of change before they would occur.

But, again, there is an element what we call quick-turn that is necessary quarter by quarter for us to sell -- well, first of all, close, sell and install within the 90-day period of the quarter that is contemplated for a portion of what we were expecting for overall revenue growth that is reflective of the guidance.

So, in other words, we still do need to sell things within the period we are in to make the requisite growth.

It is not a slamdunk as we go out, and Q1 is printed already.

That is not what I'm suggesting.

It is a little bit of both.

But we do have the benefits of given the backlog position and the longer sales cycle and the longer implementation cycle, we should be getting signals perhaps a little earlier upstream than some other businesses.

So basically you have a turns business in every quarter?

And, in general, can you give us a feel how big that is for your number?

I mean turns makes up in terms of total quarterly revenue on average, nothing for next quarter, but just get a feel for the size?

So generally, and this is just a general I would say 20% or 25% roughly.

At this time, I would like to turn the floor back over to Shep Dunlap, Vice President of Investor Relations, for any additional or closing comments.

Thank you.

I want to remind everyone the details outlining highlighted items are GAAP to non-GAAP P&L reconciliations and other financial information can be found on our motorolasolutions.com Investor Relations site.

An audio replay, together with a copy of today's slides, will also be available on this site shortly after the conclusion of this call.

During this call, we have made a number of forward-looking statements within the meaning of applicable federal securities law.

Forward-looking statements are any statements that are not historical facts.

These forward-looking statements are based on the current expectations of Motorola, Motorola Solutions, and we can give no assurance that any future results or events discussed will be achieved.

Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Such forward-looking statements include, but are not limited to, our comments and answers relating to the following topics -- the impact of the separation of Motorola Mobility; the planned sale of our Networks business; future strategic plans; potential cost reductions and guidance for Motorola Solutions; earnings-per-share; future sales growth; tax rate; operating earnings; operating margins and profitability; expected cash position; pension cash contributions; and the return of capital to shareholders; and demand trends for Motorola Solutions' businesses and products.

Because forward-looking statements involve risks and uncertainties, Motorola Solutions' actual results could differ materially from those stated in these forward-looking statements.

Information about the factors that could cause and in some cases have caused such differences can be found in this morning's press release on pages 58 through 62 in Part II Item 1A of our quarterly report and on Form 10-Q for the period ended October 2, 2010, on pages 17 through 29, in Item 1A of our 2009 annual report on Form 10-K, and in Motorola Solutions' other SEC filings.

Thanks and we look forward to speaking with all of you again.

Ladies and gentlemen, this does conclude today's teleconference.

A replay of this call will be available over the Internet in approximately three hours.

The website address is www.motorolasolutions.com/investor.

We thank you for your participation, and ask that you please disconnect your lines at this time.

Thank you and have a wonderful day.