In 2006, Motorola was the second-largest player in the cell phone market, behind Nokia and ahead of Samsung, with a 21% market share. At that time, the group had sold 217.4 million units, far behind Nokia and its 347.5 million phones sold, but just as far ahead of its South Korean rival and its 118 million handsets sold. At the time, Motorola was one of the world's most successful and respected technology companies. For the record, the first call from a cell phone was made in April 1973 by a Motorola engineer. In 2006, Motorola had sales of almost $43 billion.

It was also in 2006 that the attractive growth scenario imagined by management turned sour. The company was hit both by Apple's switch from Motorola's PowerPC chips to those used by Intel, and by the arrival of the iPhone, whose innovation immediately shook up the entire market.

The company then embarked on a major restructuring, opting to split into two separate entities, Motorola Mobility and Motorola Solutions. The former, which encompasses the company's smartphone and telephony activities, is no longer part of the group's perimeter, having been sold to Google in 2012 for $12.5 billion, and then to Lenovo just two years later. The Chinese group still operates the brand today.

Motorola Solutions generates 75% of its sales with its Land Mobile Radio (LMR) division. This complex name includes two-way radios and broadband communication networks. The remainder of revenues are generated by video security and access control devices (17%), and by software solutions for command centers that manage flows such as emergency calls and security alerts. For example, 3,600 of the 6,000 911 call centers in the U.S. are equipped with Motorola software solutions.

The 3 divisions (source: Motorola Solutions)

All three segments are growing strongly. The total addressable market grew from $13 billion in 2015 to $66 billion last year. Management notes a general intensification of competition, but there are many positive factors that should maintain the growth trajectory of previous years. Since 2015, sales have in fact risen from $5.7 bn to $10 bn, and operating margin has gained almost 10 points from 18.2% to 27.9%.

Firstly, the Group generates 75% of its sales with public safety entities (police, fire department, emergency medical services, education, etc.) and therefore benefits from the increase in defense budgets and the advantageous conditions granted to American companies. The NDAA, the annual law that authorizes the Defense Department's budget and spending, has prohibited several Chinese companies from supplying security equipment to American public entities.

Secondly, Motorola is emphasizing the use of AI and its lead over its competitors in this field. A significant part of the range of cameras and radios is equipped with AI functionalities such as real-time translation, immediadiate transcription, for example for 911 call reception tools, US emergency services, anomaly detection functionalities, automatic alerts and access control. This is a good thing, given the increased interest in this trend at present.

Overview of the competitive environment for each business (source: Motorola Solutions)

For the main business, LMR, growth will be driven by the expansion of networks and needs, and the renewal of devices. For video security and access control solutions, the company notes growth capabilities in the cloud, new uses such as license plate recognition, and the orchestration and integration of new product lines.

Finally, Motorola has opportunities for international development. The company currently generates 69% of its sales in North America and 31% internationally. Overall, however, international coverage is fairly limited, as revenues are widely dispersed. Less than $1 billion of sales come from Europe, Australia and New Zealand.

Breakdown of sales by geography (source: Motorola Solutions)

These strengths are reflected in the Group's financial statements. Indebtedness is well under control, at less than 1.5 times EBITDA, and the company's strong cash position means that new acquisitions can be contemplated. Last but not least, we'd like to highlight the qualities of our management team: CEO Gregory Brown has been with the Group since 2003, and at the helm of the Motorola Solutions division since 2008. His experience is invaluable, and his management is conservative: stock option compensation is low, and shareholders are taken seriously. Share buybacks are numerous, with 29.7% of capital bought back since 2014. The dividend is increased year on year, in line with published figures.

Nearly $6bn invested in acquisitions since 2015 (source: Motorola solutions)

The outlook for this year is in line with the track record of recent years. Revenue growth is expected to be 7%, and earnings per share should come out at between $12.9 and $13 per share, compared with $11.95 last year.

Motorola has a bright future ahead of it. All the lights are green. The valuation is high (45 times earnings for this year, 31.5 times for 2025), but the technological value profile, the outlook, the quality of management and the consistency in the quality of publications justify a high valuation. Motorola Solutions should continue to surprise us over the next few years.

Since the major restructuring, Motorola Solutions has outperformed the S&P500 (source: MarketScreener)