Motorola 2010 Annual Report Download - page 44

36
•In the Home Business: Weakened macro economic conditions provided some challenges for the industry.
Demand for set-top boxes declined year-on-year in the first half of the year followed by modest growth in the
second half. To strengthen its product portfolio, the segment made a number of enhancements including
advanced set-top boxes, including those which can enable viewing of 3D TV, software solutions that allow
operators to manage content across a multi-screen environment, and a multi-media IP hub that gives
consumers more control and access to content. In infrastructure, sales grew in 2010 as operators upgraded
networks to expand capacity and provide capabilities for advanced services. From a financial perspective,
while Home sales declined in 2010 compared to 2009, the segment improved its operating margin by
remaining focused on its priority markets, introducing innovative new products, and reducing operating
expenses while continuing to invest in future growth opportunities. However, the segment continued to be
impacted by economic conditions in the U.S. primarily as a result of the housing market.
Looking Forward
On January 4, 2011, we completed the separation of Motorola Mobility, which included the Mobile Devices
and Home segments. Motorola Solutions, which is now comprised solely of our Enterprise Mobility Solutions
Segment, has leading positions in both mission critical and business critical communications solutions for
government and enterprise customers around the world.
Total sales in our government and public safety market grew 5% in 2010 with growth in every region,
demonstrating the resiliency of demand for our products. While government customers may face challenging
economic environments, we believe these customers will continue to place a high priority on mission critical
communications and technologies that supplement operational efficiency and effectiveness. We anticipate growth in
North America as well as in our international government business. We continue to innovate in our radio products
and solutions including TETRA, APCO 25 and DRM, and we are working with customers to develop and deploy
next generation public safety equipment, including radios, video surveillance and LTE for public safety.
Conditions in our commercial enterprise market improved significantly from 2009, with sales growth of 19%
in 2010. Improvements in retail spending resulted in an increased demand trend as many of our customers
reinvested in technology to improve supply chain efficiencies, increase productivity of associates and improve
end-customer buying experiences. We believe the trend of increased mobile workers, and demand for real-time
information will accelerate next-generation enterprise mobile computing and advance data capture solutions. With
our prioritized investments in next generation products, comprehensive solutions portfolio, and market leadership,
we are well positioned for profitable growth in the commercial enterprise markets.
We are targeting closing the sale of our Networks business to Nokia Siemens Networks B.V. (“NSN”) in the
first quarter of 2011, which remains subject to the satisfaction of closing conditions, including receipt of regulatory
approvals. This business is reported in discontinued operations. For the iDEN infrastructure business, which we will
retain and report in the Enterprise Mobility Solutions Segment, we have negotiated supply agreements with our two
primary customers for iDEN support through 2013.
Due to increased demand for products, many electronic manufacturers are experiencing shortages for certain
components. We continue to work closely with our suppliers to secure adequate supply. If demand for our products
increases from our current expectations, we may experience periodic supply shortages.
We are committed to employing disciplined financial policies, achieving our financial plan, and optimizing our
capital structure. We will continue to evaluate opportunities to return capital to shareholders as we further
strengthen our balance sheet.
We conduct our business in competitive markets, facing both new and established competitors. The markets for
many of our products are characterized by rapidly changing technologies and evolving industry standards. Market
disruptions caused by new technologies, the entry of new competitors, consolidations among our customers and
competitors, and changes in regulatory requirements, among other matters, can introduce volatility into our
businesses. Meeting all of these challenges requires consistent operational planning and execution and investment in
technology, resulting in innovative products that meet the needs of our customers globally. As we execute on
meeting these objectives, we remain focused on taking the necessary action to design and deliver differentiated and
innovative products and services that serve the needs of the government and commercial enterprise markets.