The verdict on FirstNet’s acceptance is being rendered daily. Not one state has opted out, and every day new ones are opting in (15 so far). The massive cost savings and disruptive technology advancements are no longer up for discussion. Furthermore, the $40 billion commitment from AT&T, funding the national buildout of mission-critical quality LTE infrastructure, is not open for debate.
This past weekend Barron’s Magazine published a story titled “Static Ahead for Motorola Solutions“.
This story comes 6 months after Citron criticized Motorola Solutions for abusive selling practices to the US Government, and using their monopoly position in LMR Radio to stifle innovation. Citron’s main point was that Motorola’s companywide margins and EBITDA are all propped up by inflated US handset pricing (estimated to have 83% margins, and contribute over 70% of EBITDA). These radios run on their proprietary network for Push-to-Talk Land Mobile Radio (LMR), a legacy platform which benefits Motorola exclusively.
In our first report we suggested that the government might one day put an end to the price gouging. That is now irrelevant. Companies can fight off regulation, but it is impossible to fight off innovation – just ask the old Motorola.
While the writer at Barron’s followed up the story, they missed the pivotal issues that have emerged from the shadows, illuminating how the case against Motorola is gaining momentum on a daily basis. Citron explains why Motorola cannot avoid a margin compression collapse, on its way to $45 near term, and probably lower.
FirstNet is a Megatrend — the most significant change to first responder communication in over 50 years. It is not “competition”; it is the foundation of a new platform which will transform law enforcement and emergency response.
Investors have failed to take notice that Motorola is on the wrong side of a Megatrend, which seems to be a corporate tradition identified with the name Motorola. First the pager, then the flip phone, and now Land Mobile Radios. While the trend takes longer than a year to play out, we are already seeing the beginning of the end.
While Motorola has continued its campaign of misinformation to Wall Street and to the financial media, FirstNet has gained serious traction in the last six months. Citron presents proof that Motorola’s dominant position in LMR is fast waning, eclipsed by FirstNet’s bright and sunny future.