Contact: Scott Denne
The outlook for Zebra Technologies’ acquisition of Motorola’s enterprise business dampened this week as Motorola announced that revenue from the unit dropped 8% year over year. While shrinking sales is no surprise (and a big part of the company’s reasons for unloading the business to begin with), the decline is larger than the 1-5% dips that Motorola typically posts, and is the largest drop in almost two years.
Despite that decline, Zebra’s management stuck to its projection that the combined business would be able to log 4-5% annual growth. Zebra’s own business grew 14% this quarter to $288m, but is less than half the size of the target’s revenue. Management was also upbeat about the prospects for cost reductions gained through the merger, lifting its estimate to $150m from $100m at the time of the announcement (the deal is expected to close in the fourth quarter).
News of the drop sent Zebra’s stock down 9% this week, though it still trades above the level that it did before the $3.45bn transaction was announced.
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