Motorola Solutions, Inc. MSI
Q2 2010 Earnings Call Transcript
Transcript Call Date 07/29/2010

Operator: Good morning and thank you for holding. Welcome to Motorola's Second 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 Motorola's 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 through Motorola's Investor Relations website. The website address is www.motorola.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 Mr. Dean Lindroth, Corporate Vice President of Investor Relations. Mr. Lindroth, you may begin your conference.

Dean Lindroth - Corporate VP, IR: Thank you and good morning. Welcome to Motorola's second quarter results conference call. Today's call will include prepared remarks by Sanjay Jha, Co-Chief Executive Officer of Motorola and CEO of Motorola Mobility; Greg Brown, Co-Chief Executive Officer of Motorola and CEO of Motorola Solutions; and Ed Fitzpatrick, Motorola's Chief Financial Officer.

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 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 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. Information about factors that could cause, and in some cases have caused such differences can be found in this morning's press release on pages 17 through 29 in item 1A of Motorola's 2009 Annual Report on Form 10-K and in Motorola's other SEC filings available for free on the SEC's website at www.sec.gov and on Motorola's website at www.motorola.com.

This presentation is being made on the 29th of July, 2010. The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Motorola will not be reviewing or updating the material that is contained herein.

With that, I'll now turn the call over to Sanjay.

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Thanks, Dean. Good morning and thank you for joining us. This morning Motorola reported sales in the second quarter of $5.4 billion. On a non-GAAP basis, earnings were $0.09 per share compared to $0.03 per share in the second quarter of last year. Each of our businesses delivered improved operating results year-over-year and sequentially. We generated $242 million of operating cash flow compared to $500 million – and completed a $500 million debt tender offer and ended the quarter with total cash of $8.3 billion.

In Mobile Devices, smartphone unit shipments increased sequentially to 2.7 million units and then non-GAAP operating loss declined. DROID X launched with Verizon in mid July is off to a great start and is exceeding our expectations.

In Home, sales were up sequentially and operating margin was higher. In EMS, sales grew 10% year-over-year driven by continued recovery in the enterprise market and operating margin was higher.

In Network, second quarter sales and margins were up sequentially. We also announced that Nokia Siemens Networks plans to acquire the majority of assets of our Networks business. Greg will comment further on the Network's transaction later in this call.

Regarding separation, we continue to make significant progress in our plan to create two independent publicly-traded companies. This month we filed our initial Form-10 registration statement with the SEC. The filing contains information relating to the separation and the business strategies of Motorola Mobility, which will be comprised of Mobile Devices and Home. Upon separation, Enterprise Mobility Solution and the iDEN infrastructure business will comprise the Company to be led by Greg Brown and will be called Motorola Solutions. Our target for the separation remains the first quarter of 2011.

I'll turn the call over now to Ed to provide additional details on Motorola's overall financial results for the quarter. I will then come back to review Motorola Mobility, and then Greg will cover Motorola Solutions. Ed?

Edward J. Fitzpatrick - SVP and CFO, Motorola: Thanks, Sanjay. Motorola sales were $5.4 billion in the second quarter. On a GAAP basis, second quarter earnings were $0.07 per share compared to $0.01 per share a year ago. As Sanjay stated, non-GAAP earnings, which exclude highlighted items, stock compensation and intangible amortization were $0.09 per share. This compares to $0.03 per share in the second quarter of 2009. Highlighted items totaled net income of $0.02 per share. This includes income related to a legal settlement, tax recovery, and the sale of certain businesses and investments partially offset by expenses associated with separation and reorganizations costs.

Stock compensation and intangible amortization expenses were $0.04 per share consistent with prior quarters. Further details on non-GAAP earnings are included as part of today's press release. All remaining financial references will exclude highlighted items, stock compensation and intangible amortization.

Gross margins in the quarter increased to 37.3% from 31.1% in the second quarter of 2009. The increase was due to improvements in all of the businesses with the most significant improvement coming in Mobile Devices.

Operating expenses in the quarter were 4% – or were up 4% year-over-year. The increase primarily relates to investments in sales and marketing as well as advertising and promotional expenses and supported key products across all of our businesses. With the updated geographical mix of income that we anticipate for this year, we now expect a full year tax rate of 36% to 37%, up from our previous estimate of 34% to 35%. As a result, the ongoing tax rate in the quarter was 40%. While our income statement tax rate will be higher than previously anticipated, we do not expect any meaningful change in cash taxes paid this year.

Moving now to the balance sheet, in the quarter we generated operating cash flow of $242 million. This includes the legal settlement in relation to patent infringement litigation, which resulted in a one-time cash inflow of $175 million.

Inventory increased by $48 million sequentially, however, inventory turns improved to 11 compared to 10 turns in the first quarter and nine turns in the second quarter of last year. Accounts receivable also increased in the quarter reflecting the sequential sales growth, less favorable linearity and a lower level of cash inflow from sales receivables. As a result, days sales outstanding were 61 days, up from 57 days in the first quarter. We do expect to drive DSOs below the current level during the second half. During the quarter, we completed a $500 million debt tender offer and closed on a sale of our Israel-based wireless network operator business.

Total cash at the end of the quarter was $8.3 billion compared to $8.5 billion at the end of the first quarter. Net cash at the end of the quarter was $4.9 billion, up from $4.6 billion in the first quarter and $2.5 billion in the second quarter of 2009.

Turning now to our outlook, we expect third quarter earnings to be in the range of $0.10 to $0.12 per share. This guidance includes the network business and excludes $0.04 per share related to stock compensation and intangible amortization expenses, as well as items historically highlighted in our quarterly earnings releases.

With that I will pass the call to Sanjay to discuss Motorola mobility.

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Thanks Ed. Mobile Devices' second quarter sales were over $1.7 billion on total shipment of 8.3 million units including 2.7 million smartphones. Overall ASP increased to approximately $207 from $192 in the first quarter due to a more favorable product mix. We now have over 300 smartphone launches with carriers, distributors, and retailers in 85 countries. While we continue to build momentum in U.S., our sales outside North America accounted for 34% of our total sales.

The operating loss in the quarter declined to $109 million compared to a loss of $148 million in the first quarter on a sequential basis. The loss declined due to a higher smartphone unit volume and improved overall gross margin percentage, offset partially by slightly higher operating expenses.

During the quarter, we made four additions to our smartphone portfolio, the i1, the world's first push-to-talk Android-powered smartphone began shipping to Sprint in May. The DROID X with its rich mobile Internet experience and enhanced enterprise capabilities is getting a great reception from consumers.

Two devices with a more social, stay-connected focus included the FLIPOUT, which features a compact pivoting design, enhanced MOTOBLUR functionality will ship into Latin America, Europe, and U.S. this quarter and CHARM also with enhanced MOTOBLUR functionality was shipped to T-Mobile.

With our enhancements to MOTOBLUR, consumers will have increased control over their mobile experience. Enhancements include customizable content filters, ability to move and resize widgets, and new ways to manage and improve battery life and data usage. MOTOBLUR is a clear satisfy for consumers and we expect it to create consumer stickiness and improve long-term repurchase intent for our devices.

In China, our second largest smartphone market, sales grew nearly 9% sequentially. With seven smartphones now in the market, sales were solid for all three major carriers with our top seller being the XT800 for China Telecom.

As we expand our portfolio further in the second half, we will continue to focus on differentiating ourselves in a number of ways. These include a broad-based portfolio of smartphones with tightly integrated consumer experiences, focused R&D investments, continued supply chain and manufacturing execution, uncompromising quality in hardware and RF design and a strong brand. From a brand perspective, the strength of our smartphone portfolio is improving brand awareness, purchase intent and relevancy in key markets.

With an expanding portfolio of leadership products, we can leverage a strengthening brand to grow in North America, China and Latin America. Our focus will expand to include more emphasis on Europe and other strategic markets next year.

With regards to the portfolio, we now expect to launch more than 20 smartphones this year. Regarding our smartphone shipment guidance, I remain confident in the range of 12 million to 14 million units shipped this year and mid-to-high tier feature phones as we anticipated volume declined in the second quarter.

To the second half, we expect feature phone unit volume to remain relatively stable. In voice-centric devices, we expect to build brand awareness, meet retail channel requirements and yield modest financial returns.

Looking ahead on a sequential basis, we expect third quarter smartphone unit volume, overall unit volume and total sales to be higher and for the first time, since the fourth quarter of 2006 mobile devices will go its top line on a year-over-year basis.

With a sequentially higher unit volume and improved mix, we expect a further reduction in the operating loss and in the fourth quarter, we continue to expect to be profitable driven by further increases in smartphone volumes.

Turning now to the results for Home in second quarter. Home sales were $886 million, up 6% sequentially. Sales of customer premise equipment were up slightly and reflected a higher demand for HD set-tops compared to the first quarter.

Competitiveness amongst our customer base growing, growing HD content and channel offering and on-demand services are all contributing to network expansion. As a result, sales of video and access infrastructure were up sequentially, up double-digits year-over-year and accounted for over 25% of total Home sales.

Sales outside North America were up slightly year-over-year sequentially and accounted for approximately 30% of total sales. Operating margin increased to 6.4% from 4.8% in the second quarter of last year. The improvement was driven by favorable product mix and lower operating costs.

In Home, we focused on extending our video leadership position, capabilities and portfolio of solutions to support our customers' needs to deliver content and advanced services in a more personalized fashion for consumers. This includes whole-home network solutions, 3D TV, interactive services and converged experiences, such as uniform delivery of content to a multi-screen environment.

In the quarter, we introduced an advanced HD IPTV set-top box with KDDI in Japan, which addresses the trend towards fixed mobile convergence. It supports ultra high-speed broadband connections and personalized media experiences including set-top to mobile device content transfer.

We announced software enhancements for our DCX line of set-tops, which provide consumers with a simplified 3D viewing experience in the home. For operators, it provides a solution to deploy 3D contents using existing video delivery infrastructure. We expanded our portfolio with an all-digital set-top that can serve as a multimedia IP hub for whole-home networks, giving consumers more control and access to content anywhere in the home.

Finally, we announced Medios, a suite of software solutions that evolve with current network element to allow operators to receive store and distribute content across the multiple screen environment. It also provides merchandising tool and security that enable advanced on-demand services in commerce.

Turning now to outlook; in Home, we now expect sales for the full year to decline by approximately 7%, which is at the top end of the range we previously provided. Operating margin is expected to increase driven by a favorable product mix and improvement in the cost structure.

For the third quarter, we expect Home sales to be comparable with higher operating margin as compared to the second quarter.

In closing, the filing of our initial Registration Statement with the SEC earlier this month was a milestone event, as we continue on a path to create a new independent public company. The convergence of wireless, media and Internet and computing is creating a digital lifestyle for consumers globally. Consumers increasingly want to communicate managed content and experiencing entertainment and the Internet in a way that's more personal intuitive and contextual, and they want to do so from any location and on any screen.

Motorola Mobility's core strengths and synergies and technology, design and customer relationships, together with an industrial-leading intellectual property portfolio and a reenergized brand puts us in a unique position to address this growing marketplace.

With that, I'll pass the call over to Greg to discuss Motorola Solutions. Greg?

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Thanks, Sanjay, and good morning. Last week, we announced an agreement with Nokia Siemens Networks to purchase the majority of our wireless network assets, including CDMA, GSM, WiMAX and LTE. NSN is the right partner for our Network's customers and our employees given their position in the industry and their commitment to long-term growth. We will receive $1.35 billion in value from the transaction, which includes $1.2 billion from NSN and $150 million for retained accounts receivable.

We also retained our profitable iDEN business, substantially all of the wireless network's patents and also a portfolio of long-term receivables. We're proud of the track record and accomplishments delivered by the business and its employees. This is particularly true over the last few years and it's the very challenging competitive and economic environment.

With the transition in Nokia Siemens Networks, our employees will be able to continue to deliver innovative solutions and serve our customers around the world. The transaction is expected to close by the end of the year. Over the next several months, we'll work with NSN on a smooth transition and continue to meet the needs of our customers around the world.

Turning now to results for the quarter, both Enterprise Mobility Solutions and Networks delivered a very strong financial and operational performance. In EMS, second quarter sales were $1.9 billion, up 10% compared to the year ago quarter. In our Enterprise market, recovery continues evidenced by double-digit sales growth in all four geographic regions. Government sales were also up over the last year with growth largely coming from the Americas.

Operating margin increased to 15.8% from 13.4% in the second quarter of last year. The increase was due primarily to higher sales and a more favorable product mix. Second quarter sales in North America grew 14% year-over-year. Growth was driven by both public-safety and enterprise markets. Notable new subscriber wins included awards in California, New York, and Canada. Major P25 system wins included counties in New York, Washington, Maryland, and Georgia, two of which displaced incumbent suppliers.

In Enterprise, sales were strong in all product categories. In RFID solutions, we're beginning to see stronger interest levels driven by inventory control benefits and the opportunity for retailers to increase sales per customer. In this regard, our mobile RFID platform was recently deployed by Wal-Mart U.S. to support their apparel-tracking program. Overtime, we expect Wal-Mart U.S. and other retailers to expand their use of RFID solutions across a wide variety of product categories.

In EMEA, total sales were up 1% in the quarter, amid continuing economic and fiscal challenges. Particularly, in Europe, we continue to see good customer engagement, but lower top line growth compared to other regions. The growth that we are experiencing is being driven by Enterprise markets growing at double-digit rates.

Part of this growth is being driven by a very successful reception to our personal shopping systems, which improve the convenience of the in-store shopping experience. With demonstrated benefits, such as improved service levels and enhanced customer loyalty, demand by retailers has been strong including recent sales to Carrefour, IKEA and Tesco.

In Asia, sales in the quarter were up 2% compared to a year ago. Normalizing for a major system implementation in Malaysia last year, Asia sales were 18% over last year. Enterprise markets continued to perform very well and major new orders included public-safety and transportation wins in China and in India.

From an R&D perspective, we continue to invest in this business during the tough economic climate of 2008 and 2009. As a result, we are well-positioned for emerging growth opportunities in both enterprise and public-safety markets.

This past quarter in the enterprise market, we announced the smallest and lightest enterprise digital assistant in our mobile computing platform. The ES400 features a customizable user interface, integrated voice and data capabilities, as well as mobile computing and scanning functionality. This device is targeted at improving the productivity and efficiency of mobile workforces and offers enterprise class security for business critical applications and information.

We also introduced the industry's first TETRA wideband data capable mobile radio and the world's smallest single unit data capable base station offering a cost-effective solution for expanding coverage.

Finally, we recently outlined our strategy for delivering next generation advanced communications solutions for public-safety. Our solutions address the growing need to supplement voice with rich data imagining and video communications enabled by broadband networks.

By connecting multiple agencies and jurisdictions with mission critical voice and LTE networks, we can enhance situational awareness, improve productivity and heighten preparedness for emergency situations. Today, we are announcing that we were awarded the first phase of a 700 megahertz LTE network for public-safety across multiple counties in the San Francisco Bay area. This agreement represents a first step in deploying a unified state-of-the-art private mission critical broadband multimedia network.

By combining a public-safety hardened LTE network with the existing voice and data networks, the San Francisco Bay area has the opportunity to equip their first responders with the advanced communications tools that they need to better protect themselves and their communities. This system is the first of its kind and further demonstrates Motorola's leadership and commitment to delivering innovative next generation public-safety solutions.

Looking ahead for the third quarter, on a sequential basis, we expect sales to be comparable with higher operating margin. We still continue to expect full year sales growth in the mid single digits with a slightly improved operating margin for the full year compared with 2009.

Turning now to Networks; sales were $967 million, down slightly from a year ago and up 8% from the first quarter, driven by strong CDMA sales in North America. Operating margin was 19.8% compared to 14.9% in the year ago quarter. As was the case in the first quarter, the margin level was driven primarily by a favorable mix.

In LTE, we continue to make progress in our KDDI implementation. In China, we've successfully completed Phase I field trials of our TD-LTE Solution. We are now moving forward with Phase II of that trial. We also continue to showcase our LTE capabilities in partnership with China Mobile at the Shanghai World Expo.

Regarding our outlook, following a very strong first half in CDMA, we do expect to gradually return to a more normalized sales mix and operating margin level by the fourth quarter. In the third quarter, on a sequential basis, we expect sales to be comparable with lower operating margin. For the full year, we expect sales to be down approximately 10% compared to 2009 with operating margin now expected to be in the range for the full year of 13% to 14%.

In closing, all of Motorola's businesses performed well in the quarter, delivering improved financial results year-over-year. In the first half, we generated non-GAAP earnings of $.015 per share compared to breakeven on a per share basis in the first half of last year, and net cash is up $2.4 billion from the second quarter of 2009.

As we head into the third quarter, we expect to deliver higher earnings, generate positive operating cash flow, and for the first time in three and a half years, we expect Motorola's quarterly sales to grow year-over-year.

In the coming months, we will also continue to make progress on separation and creating two companies poised for long-term success. Sanjay talked about Motorola Mobility being uniquely positioned for converging consumer demands. For Motorola Solutions with a sharpened strategic focus, we are solidly positioned for profitable growth.

We plan to leverage our market leadership in public-safety, mobile computing, data capture and wireless LAN to provide next-generation solutions for our government, public-safety, and enterprise customers around the world.

With that, I'll now turn the call over to Dean to start the Q&A.

Dean Lindroth - Corporate VP, IR: Thanks, Greg. Before we begin taking questions, we'd like to remind callers to limit themselves to one question, so that we can accommodate as many participants as possible. Operator you can now provide our callers with instructions on how to ask a question.

Transcript Call Date 07/29/2010

Operator: Ittai Kidron, Oppenheimer.

Ittai Kidron - Oppenheimer: Sanjay, with regards to your guidance, I must say I'm somewhat disappointed on your smartphone guidance. Its two quarters in a row now where you 'come ahead of your expectations yet you don't seem to feel enough confidence to raise the high end of your guidance for smartphones.' So, maybe you can kind of walk us through the puts and takes and what you are seeing in the business that makes you still remain very conservative on that front? Second, with regards to the operating margin improvement, what needs to happen? Is profitability in the third quarter even a possibility or you think it's a remote possibility?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: I just looked at your question the last earnings call, and I think your question was roughly the same as the last earning call, and I guess to the substance of the question, I certainly have greater confidence now in the range. I would say absent supply chain constraints, I would see a modest increase in shipments beyond what I have guided, but as you know there are some constraints in the industry today. I would also say that I believe that we have momentum going into the third and fourth quarter, and we have greater visibility of our customer demand and market acceptance of our products. Nonetheless, we feel that the range is an appropriate range for the moment. In terms of operating margins, we have guided you to profitability in fourth quarter, and we remain confident that we will be able to achieve that. In the third quarter, we have guided you to sequential improvement in operating profit and we again remain confident in that range, Ittai.

Operator: Mark Sue, RBC Capital Markets.

Mark Sue - RBC Capital Markets: Sanjay, tactically are there more proactive things you can do to drive consumer preference towards Motorola versus the 30 other Android devices out there, without increasing your OpEx. How can you ensure that Motorola is and will remain Verizon's first choice, for example? Can you replicate this model with another carrier? Also, do you feel Android and DROID X in particular is more than enough for Verizon to no longer consider an iPhone for their network?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Well, tactically, if I look at what is driving our success in the marketplace, I think it's definitely the quality of our design and the quality of our execution in Android space. Remember that DROID X is not a Google-experience device. It's a Motorola-experience device and we have spent a lot of time integrating a lot of experiences, which are unique to Motorola, MOTOBLUR is one. Certainly, the user interface is meaningfully improved also from what we delivered in our first MOTOBLUR experience. So I think that the first part of it is our own execution of product. We believe that we have delivered a very good quality product. The short period that that product has been in the market, we have seen very good quality. The return rate is very good also. I think we need to get associates in each of the retail channels to view Motorola DROID as a safe device that they can recommend to their customers. We achieved that with DROID and I believe we are well on the way of achieving that with the DROID X. I would say the improvement in our brand name and brand positioning is very important to us. Our relationship with our carrier is very important to us. I really think the expansion of our footprint outside of United States and with other carriers is also going to be important to us. In terms of iPhone, I really don't know the dynamics around that discussion with various different carriers in United States. I can tell you that I think DROID is a meaningful economic proposition for Verizon. My perspective is that as long as we continue to execute the way we're doing it, Verizon will continue to invest in both us as well as DROID as a brand name.

Operator: Brian Modoff, Deutsche Bank.

Brian Modoff - Deutsche Bank: Sanjay, a couple of questions. You talked briefly about China. Can you kind of give us a little more granularity on what you expect out of that market sequentially, what kind of number of brands or number of different phones you expect to have in that market for this year? What do you think it will be as a percent of your revenue for the year? Then on MOTOBLUR, obviously, it's very important to you, but it's still not a category that we see a lot of advertising on or see a lot of promotion of. What are your plans for MOTOBLURs through the end of the year?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Brian, outside of U.S., about 35% of all of our revenues outside of U.S. and China accounts for – China and Latin America are the two largest contributors to that 35% of our total revenue. As I've said earlier, we have seven products in the market and we'll continue to roll out new products in China and across other regions. In China, our portfolio divides into two categories. Specific device is just for China, for instance, our XT800 is a dual standby device dedicated to China Telecom. The other devices are devices like BACKFLIP, DEXT, and MILESTONE, which we have rolled out across all the international regions. So, you will see us deliver TD-SCDMA dedicated devices to China Mobile, some dedicated devices to China Telecom and for China Unicom, we tend to use devices which are more international. As I look forward to China, both this year and going forward, I guess, in next, we continue to see expansion in our revenue and gross margin from China. It's a place where we will invest more in building our brand, and we see a great opportunity in China, Brian.

Brian Modoff - Deutsche Bank: Then MOTOBLUR?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: With MOTOBLUR, we have found that being able to convey the value proposition around MOTOBLUR is not an easy thing to do in a 30-second ad spot. We have decided that we will focus on the value proposition of products and not MOTOBLUR as a brand name in its own right. MOTOBLUR continues to be important and I think you will see increased functionality in MOTOBLUR. This notion of push-Internet is going to be very important to us, but as a brand name, which we make matter in front of consumers as a brand name, I don't think that's going to be our focus going forward, but we see the experiences that we deliver is being relevant and differentiating us.

Operator: Mark McKechnie, Gleacher & Co.

Mark McKechnie - Gleacher & Co.: Sanjay, I wanted to ask about you mentioned some supply constraints that's limiting the upside above the 14 million level, can you talk a little bit about the supply/demand dynamics of that DROID X launch and how Verizon is seeing your overall launch?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Mark, certainly DROID X has exceeded our expectations at appropriate time. Verizon will come and turn the sales numbers, but we believe that we will catch up with demand sometime through the course of this quarter. We find multiple components in the industry being constrained, I think the investment largely in semiconductor space of various different kinds over the last 2.5 years has been below par, and I believe that the industry now is trying to compensate for that and there is some greater investment in the semiconductor space. But at the moment, I would say that is probably our largest constraint. We are working very closely with our partners, as some of you know I was in that space and I have very good relationship in that space, and I expect that we will overcome some of those issues as we progress through the year. In terms of Verizon's attitude towards DROID X, our shipments are still relatively healthy and it's just the demand that is outstripping those supplies. So, Verizon has been very understanding of our position.

Operator: Phil Cusick, Macquarie Research.

Phil Cusick - Macquarie Research: Greg, it seems like the constant conversation is what's the visibility on government and their continued ability to spend, as municipalities come under pressure and it just seems like you are not seeing any issues, can you talk about that a little bit? Then what's the conversation like with Enterprise these days? Are they looking to ramp up spending? It sounds like things are going really well, but is there, sort of, overall spending coming up or is it just a shift in their spend toward you?

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: So I think that the 10% revenue growth for EMS in Q2 was really, really strong and just to clarify on the full year, we left guidance for the full year still at mid-single digits. I do want to point out that at the end of May we sold MIRS, which was the Israeli-based iDEN wireless operator network. So when you normalize for MIRS coming out for the seven months left in 2010, the growth rate for EMS on a normalized basis is solidly in the 5% to 8% sales growth range with operating margin for the full year approximately in the 16% to 17% range. That said, Phil, you are right. Public-safety spending has been pretty resilient. It was generally flattish in Europe and Asia, up in the Americas, and I think it's a reflection of, despite the stress and duress of state budgets, the prioritization and the importance of mission-critical infrastructure and upgrading that technology to improve interoperability. We always watch it every quarter and so far it has performed quite well for the first half of 2010. In terms of the conversion with Enterprise, it's excellent. The engagements are up, the funnel is up. We've grown in double-digits on the Enterprise side in Q2, and I think it's a reflection of overall spending coming up and a prioritization and a pick, if you will, Phil, investment that we suspended for the previous three, four, five quarters, given the economic downturn and with a positive ROI and fairly rapid payback around inventory management in store shopping and so on, it's picking up nicely.

Phil Cusick - Macquarie Research: Can you talk a little more about this public-safety network in California and especially as you sell the Networks business, how is your ability to bid on those going forward change?

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: I think selling the Networks business doesn't affect our public-safety LTE position at all. Remember that the network that we are announcing today with San Francisco is a private public-safety network. So, it's private broadband LTE in the 700 megahertz band that we're building out for Phase I. It will cover multiple counties and 10 sites initially. Over time, you'll see these hardened LTE public-safety systems be private and public. Our view is and we're investing now and have been last year as well. We are delivering a private broadband LTE experience that will have roaming capabilities in rural areas and interoperability with the wireless operator in those respective regions, but in terms of LTE expertise and the investment in R&D we're making in on the private broadband side, selling Networks to Nokia Siemens does not affect that. We are still full steam ahead.

Operator: Richard Kramer, Arete Research.

Richard Kramer - Arete Research: A question for Ed to start with. Can you update us on your cash flow guidance for the full year? I think you had said previously, it was going to be flat on a gross level and now you are giving us helpfully net cash flow figures, but can you balance for us the upcoming debt repayment you have in November, the working capital reduction and receivables that you mentioned and also ongoing cash flow from operations? Also, just to follow-on with Greg. Can you outline a little bit the two to three opportunities you are going to see for EMS post-separation, given that you already have a number one share globally in public-safety and it's clear we're in Enterprise spending cycle right now, but maybe that would be somewhat of a risky assumption to assume it continues all for 2011 and 2012. So, where would Enterprise Mobility become a growth business in 2011 and beyond?

Edward J. Fitzpatrick - SVP and CFO, Motorola: I'll start on the cash and balance sheet related item. So, the cash balance today is $8.3 billion. As you know, we have approximately $500 million debt payment due in the fourth quarter. Our goal will be to offset as much as we can that debt payment. I would suspect our cash balance maybe down slightly because of the $500 million payment, but we will do our best to offset that. The only way we get there is by continuing to improve the working capital metrics. We've done a decent job. We slipped a little bit this quarter with receivables as I mentioned, but we do expect to improve on that, but the working capital balances will grow as I've mentioned on previous calls. It's just we got to continue to improve the metrics. As sales grow throughout the third and fourth quarter, working capital will grow but we will try to offset that as best we can. So, hopefully that gives us a bit of color on where we expect to end the year. Right now, I would outlook slightly down because of the debt payment. We'll try to offset that as much as we possibly can. On the cash from op, I think it flows. I think you can back into it. We talked about CapEx being in 1%, 1.5% to as high as 2% range. So, you could back into the operating cash flow for the rest of the year.

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Yeah, Richard in terms of some of the drivers post-separation for Enterprise Mobility, I guess first and foremost is we expect to see continued solid growth in the core for public-safety as there is more than enough room to grow vis-�-vis technology refresh emphasis on statewide systems here in the states, border control, anti-terrorism efforts, and then internationally with the emphasis on countrywide systems. So I think the core continues to grow and we'll continue to invest in the upgrade and technology refresh cycle. The second is 60% of the businesses in North America, 40% is in international, I think international represents a significant growth opportunity as a category where we can get increased penetration and over time grow that composition from an international expansion perspective. Third would be Enterprise and you are right it's a bit cyclical, but we are coming out of the trough in a cycle and with investment and enhancement in wireless LAN, but specifically wireless LAN security in our Symbol 802.11 technologies. In RFID, I think which was overhyped three or four years ago, and is now beginning to be more front and center, reference Wal-Mart U.S. and the RFID apparel-tracking system, which at the moment is only encompassing jeans, and we look for multiple products, multiple retailers. The third opportunity for growth is vertical expansion, we're particularly strong obviously in government and public-safety, in transportation and logistics and retail, but there is a whole adjacency around our manufacturing, education, healthcare and other verticals, where we can repurpose product and strike partnerships for vertical expansion with existing product. Then lastly, the San Francisco example this morning, I think next-generation public-safety opportunities, this is seismic. This is a fundamental structural change to this business that will move us from narrowband Push-To-Talk voice and enable us to be a full suite provider of narrowband and broadband with Motorola's worldwide recognized brand in public-safety. So the whole notion of building out a next-generation broadband LTE network for public-safety is pretty substantial and will take several years. Lastly just one more, I do think there is an opportunity on the services side and for us to evaluate services that are in markets that are logical for us to extend to whether it'd be hosted applications, public-safety, national security, enterprise-hosted services – that's another category that I think would be meaningful for us to grow.

Richard Kramer - Arete Research: Given all that, do you think this is, when you look at 2011 and beyond, could this be a double-digit growth business because in the last few years, it has obviously struggled with both with enterprise and government spending?

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Well, I think historically, Richard, the business has always been solid and in the 5% to 8% revenue growth, the exception, of course, was last year when the macroeconomics turned downward. I'll refrain from 2011 guidance, but I think the point I'm trying to make is that we're extremely well positioned as a market leader, but the markets are sizable enough from an addressability standpoint to give us ample opportunity to grow for a long period of time, and we'll update you as we get closer to separation on what 2011 looks like.

Operator: Ehud Gelblum, Morgan Stanley.

Ehud Gelblum - Morgan Stanley: Couple of questions, first for Sanjay and then for Greg, as well. Sanjay, on the unit shipments that you did this quarter on smartphones, did you notice any benefit from the lack of supply that HTC your largest, probably direct competitor at Verizon, had during the quarter, and when you shipped 2.6 million units you had guided up last quarter. Is that sort of way you had in mind the 2.6 million or did you have a lower number in mind and you actually saw some benefit from HTC to get you there? I'm trying to understand is that how much maybe you got from that break by being the only supplier at Verizon versus you had mentioned supply constraints and whether that kind of cut-off what you have been anticipating? Then in your guidance if you look at the same thing going forward, you're now guiding up, you had guided up last quarter, the last couple of quarters we ended up with plus 300,000 in Q1, plus 400,000 this quarter, when you guide up how should we be looking at guiding up? You are clearly in lot more geographies now, a lot more SKU numbers out there right now, but I would have imagined that you may have been able to sell more given the circumstances last quarter. So, just trying to understand when you say up this quarter, are we looking at up 1 million or are we looking at 0.5 million, how we should look at that opportunity? Greg you talked a little bit about RFID, but it seems that it's like you said something that maybe kind of coming into its own now after being a little bit overhyped several years ago. Do you see that as being a one of your large growth drivers going forward in terms of margins when you look at your different businesses that you are in, and specifically I am looking away from public-safety more on the Enterprise side? How do your margins change as RFID gets larger and could you give us a sense as to where you think RFID is in its lifecycle right now?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Just to clarify one thing, I think you said our shipment this quarter was 2.6. I just wanted to be clear. It was 2.7 and previous quarter it was 2.3 million. So the increase as you said was 400,000 units this year. Going forward, I anticipate the increase to be greater than that amount. To go back to your first question, did we see in the second quarter, our shipment go up because there was shortage of Incredible or HTC component, phones at Verizon? I don't know with precision the answer to that. I don't think it had as large an impact that some may believe. I don't think it had as large an impact as you may think. I think going forward, we again, just to go back to the guidance, we feel very confident in the 12 to 14 range and very confident about profitability in fourth quarter. Visibility is definitely better. There are some supply issues and there is some concern around what happens to economy in fourth quarter and those issues certainly make us careful about our guidance.

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Yeah, Ehud in terms of RFID, it's not going to be material in 2010. I think in terms of where we were at in the game, I think we're in the first or second inning in terms of RFID deployment in Enterprise systems, so it's very early. The thing also to remember is that RFID as we sell it will be bundled. So it's going to be bundled into mobile computing capabilities. It's going to be bundled into fixed readers within a store. So I wouldn't necessarily be able to extract or call out the technology in and of itself. Do I think it's a primary area for growth over the next several years? I do. It's too early to describe the addressable market and how meaningful, but without a doubt like Wal-Mart U.S. and other retailers we have engagements and we're selling opportunities that where nowhere on the radar screen 18 months ago. I think it's going to be significantly important and we'll quantify it as time moves on over the next several quarters.

Ehud Gelblum - Morgan Stanley: Sanjay, can you just clarify on the feature phones, (are we breakeven yet)?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Yes, we are. Remember that we have in that category we include both iDEN and some ruggedized devices that we deliver in that category. Edward if you remember I've broken my shipments into three categories, smartphones, feature phones and voice-centric phones, and on feature phones we are definitely profitable.

Operator: Jim Suva, Citigroup.

Jim Suva - Citigroup: A quick clarification, Sanjay, you had mentioned that you expect to launch more than 20 smartphones this year, looking back at least in January, I noticed you said that you plan to launch at least 20 smartphone devices. I am just wondering your voice seems to imply that now you are expecting a bigger than plan, but looking at the transcripts and stuff, I am just wondering if it's a play on words or really is something going better than expected in say six months ago on your number of launches? That's a kind of clarification question. Then more importantly, strategically, when you look at the Android markets, Sanjay, and you see companies such as HTC and some of the others with operating profits between 10% and 15%. Do you think that's where the market and Motorola will be able to go to or as you progress with time and the competitiveness of the market? Does it get lower? I'm just trying to view strategically where you're kind of aiming for the profitability and you see the Android and your efforts going?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: So Jim, it wasn't a word on play. That was a slightly different guidance than the guidance that I had provided. I had said at least 20 and today, I said more than 20. I think at the start of the year, I was little more conservative about our execution risks and a few other things that we have to take into account. I'm more certain about our execution and I do believe that we will deliver actually meaningfully more than 20 products. That's why I want to update the guidance to you. The second part of the question, there are two parts to the answer. One is, what will be the industry-wide operating margin for a very competitive smartphone marketplace, one? Secondly, will we converge towards that operating profit or not? My expectation is that the operating profit in the business will be – in the industry-wide, it will be high single-digit to low double-digits, and I anticipate, over a period of time, there is no reason why our profitability will not reflect industry-wide profitability, Jim. I think that for us, it's an issue of scale and making sure that we get leverage from our operating expenses and I think, over a period of, I anticipate we will get there.

Operator: Simona Jankowski, Goldman Sachs.

Simona Jankowski - Goldman, Sachs & Co.: Just a quick follow-up for both Sanjay and Greg. Sanjay, can you just comment on how much visibility you have at this point into the carrier promotions into the holidays, and in particular do you feel like you'll be getting similar positioning in terms of some of the Hero campaigns at Verizon as what you've been enjoying, considering some of the potentially new entrants there on the Android side with LG or Samsung and also potentially the iPhone? Then for Greg, you mentioned the seismic opportunities with next generation public-safety as it moves to LTE. How do you think that move to LTE is going to affect the market structure in terms of competition and margins, in particular given it's an open standard, in other words do you think that will invite some new competitors there that you didn't have before?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Simona, I'll get started with the first part of your question. I think the fourth quarter this year clearly in smartphone will be very, very competitive. You've already seen RIM announce that they will have OS6 devices in the marketplace. I anticipate that there is some good probability of Windows Phone 7 devices that'd be in the marketplace, and of course, the Android marketplace itself is highly competitive. But my visibility for fourth quarter is beginning to be better. I think that we will have meaningful products in the marketplace, and as I say, if you look at the number of launches we've already had. We have a pretty large number launches in the second half of this year. In terms of carrier promotion, I think, we're well placed. I can't say with certainty exactly how many dollars, but I think we're well placed with multiple carriers to drive sales in fourth quarter, Simona.

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Yeah, Simona, in terms of public-safety and I think the opportunity will be several years to play out. I think we're very well-positioned. The standard for narrowband is P25 and LTE per your point, is an open standard as well, defining data broadband. So, I think, we're very well-positioned. It absolutely will be competitive. The narrowband market on P25 is competitive today; of course TETRA is as well. So, LTE will be competitive in public-safety, but with our brand, our install base, the domain expertise, the customization, and our R&D investment which remains consistent and quite solid, I think we're as well-positioned or better positioned than anybody to pursue that.

Operator: Tavis McCourt, Morgan Keegan.

Tavis McCourt - Morgan Keegan: Sanjay, did any DROID X initial shipments make it into Q2 or is the DROID X completely a Q3 event? Then also your international shipments, I think, for Q1 were also about 35% of sales. I realize you're trying to run to catch-up with Verizon here. But at what point do you think we should expect that international mix to get a little bigger, would that be a prospect in the back half of this year or more of a 2011 event? Then Greg, if you can give us an update on the backlog in the government business? I remember last year there was one quarter you said the backlog had been down. Has that stabilized or start to grow again yet, or is that still somewhat challenged?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: So, Tavis, first your question was there any DROID X shipment in this quarter; yes, there was; pretty modest amount. Vast majority of shipment will obviously happen in third quarter. With the launch being on July 15, there was a very modest amount of shipment which started in the month of June, and we did recognize some of that revenue and gross margin in this quarter. The second part of your question was, are we looking to expand percentage of our revenue coming from outside. As I mentioned – outside of U.S. that is. As I mentioned, about 35% of our revenue is from outside of U.S., and as I look to the second half of this year, I think that that ratio would probably hold, and in 2011 I actually think that there will be a meaningful change. But in 2010 I expect that that ratio would be in the ballpark of where we are today.

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Tavis, in terms of backlog I would – it varies by geography, but overall I would say, it's relatively stable.

Operator: Matthew Hoffman, Cowen & Company.

Matthew Hoffman - Cowen & Company: Greg, another strong EMS quarter, and another question to you on the LTE private network award. First, what IP around LTE did EMS maintain or will maintain post the divestiture of the Networks business? Second, you kind of addressed this, but should we think of LTE as really the foundation of EMS private networks moving forward or will it just be a more of a side product line?

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Yeah, so Sanjay and I have worked very closely over the last several quarters to ensure that we are well positioned, both businesses are very well positioned from an intellectual property standpoint, and I emphasize that significantly we've stayed very linked at the hip in that regard, and as you saw when we sold the Networks business to Nokia Siemens, we Motorola retained substantially all of the wireless networking patents. I do think EMS is well positioned from an LTE intellectual property standpoint. Of course, Sanjay's business will be as well post separation. In terms of private broadband LTE, I mean, I don't want to get out in front of my headlights, but it is a very big opportunity. It's also an opportunity though that's going to take a long time and several years to build out. Recognize that today the LTE standard is for broadband data. It does not have voice in the standard. All of our mission critical data systems, P25 are voice-oriented with narrowband data. So I would expect the existing systems and architecture and infrastructure to be predominant for the next few years. Over time, private broadband LTE gets more significant, but I view them as co-existing and I view a public-private interoperable set of networks several years down the road.

Matthew Hoffman - Cowen & Company: And would you say that there is a major difference or minor difference or none at all between a hardened network IP for LTE and a traditional public LTE network?

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: I think, the major difference, and this is being talked about now is, how you design the network for capacity and throughput. So, in a public-safety network, it has to be instant on, always on and available, regardless of any instance and regardless of location. As people talk about utilizing carrier networks, they're not designed like that. They're not hardened like that. They're designed for consumer cellular usage. So as the public-safety officials design these networks going forward, they will design them with a hardened mission critical priority and preemption, which is appropriate for narrowband voice, and priority access and preemption I should say for data as well, but they're different networks and they're designed differently, and there is no substitute for a hardened public-safety private network that has spectrum that is dedicated for those events and not designed to manage congestion or peak load. It has to be always available, always on. That's the primary difference.

Operator: Tal Liani, Bank of America Merrill Lynch.

Tal Liani - Bank of America Securities Merrill Lynch: First, Greg, if you don't mind to update us on – just give us a little bit more color on the expense cuts in Networks first disposal, you said that you're going to transfer 7,500 employees maybe you can say out of how many or give us details on the expense cuts themselves? Then on the handset side, you said in the past that Android should be achieving or getting to mid-30s kind of gross margin. Now that you went with this first DROID, you went through almost a whole cycle. Can you look back and say if you touched these levels? Then also if you can project going forward is mid-30s still a good proxy for margins? The last thing is just to update Android in Europe. I haven't heard on this call any discussion of this region.

Greg Brown - Co-CEO, Motorola and CEO, Motorola Solutions: Yeah, in terms of Networks, we highlighted the 7,500 people because that represents the employee base that is expected to transfer to Nokia Siemens at year-end, when the transaction is complete. As you can see with our Q2 results and a 19.8% operating margin by far best-in-class compared to any other infrastructure provider and even with Q3, with comparable revenue with operating margin down, we still expect very strong financial contribution of Networks. We don't anticipate at this point any significant expense restructuring on the Network side between now and the end of the year.

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Tal, in terms of gross margin for smartphones, if you look our gross margins quarter-over-quarter have gone up from last quarter to this quarter, largely driven by the smartphone mix. In terms of just smartphone gross margin, we are not quite in the 30s. I think, the market today is low to mid-30s, leaving aside some outliers. I anticipate that we will – we have opportunity in the high-end to get to that, but remember that we have a much broader portfolio, particularly in the second half this year we will launch, what I'd classify as lower-end smartphones, that clearly grows our volume base, but that product mix will determine the overall smartphone volume. I anticipate if you take the mix into account, we are not going to be meaningfully away from where the industry is converging to. So, I feel pretty good about the smartphone gross margin trajectory we have here. Your second question was Europe. Actually, we have a pretty good position in Europe for second half. I don't think that you will see a dramatic investment from us in Europe, and in Europe probably our brand name is most challenged and it requires the largest amount of investment. You will see us be present in meaningful ways, but we will not – we will do that with particular carriers and particular regions, you won't see us go to Europe with a large campaign in 2010.

Operator: Jeff Kvaal, Barclays Capital.

Jeff Kvaal - Barclays Capital: I was wondering if you wouldn't mind talking a little bit about your OpEx plans in the phones division. I see that it's up a little bit in this particular quarter. I'm wondering if we should think of that as the beginning of a sustained trend and any thoughts that you can give us about what type of revenue level you'd like to be at for scale in that business to get to the mid single-digit target would be helpful?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Jeff, I think any increase in our OpEx will be success based. It will be – if we are confident that we could see that modest amount of investment could drive revenue and operating – bottom-line operating earning for us, I think, we will make those investments. Particularly I think in the second half, my concern is that there will be very large spending on marketing from multiple different place, and that we would have to spend some dollars to make sure that our brand relevancy is communicated to the consumers. I think that's probably one place that I see if we can justify that on the quarterly shipment or in very short period of time I think that I can see myself making a decision where we go and make some investment. In terms of operating expense, I feel that I guided you that quarter – year-on-year, my operating expenses will be roughly flat. I think that continues to be my intent, though if we begin to see opportunities which with modest investment we can address, I will consider that. The investment this quarter I would not necessarily take as a trend.

Jeff Kvaal - Barclays Capital: Any thoughts on where you would like to be over time on the operating margin side?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: I commented a little earlier on that. I've always said high single-digit, low double-digit is where I think it's rational to anticipate, but I think – I obviously think that it will take us a little while to get there. The biggest issue there for us is driving scale in our smartphone business The biggest issue there for us is driving scale in our smartphone business, you would see that as we go forward towards second half this year, we begin to get profitable. I think to get to those operating profit numbers, we need to build our scale a little further and I anticipate that we will get to those numbers at some point.

Jeff Kvaal - Barclays Capital: A little further or quite a bit further, I guess?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: Somewhere in between those two.

Operator: Kulbinder Garcha, Credit Suisse.

Kulbinder Garcha - Credit Suisse: Questions for Sanjay. Going back to some of the comments you made about carrier promotions. I would have thought that by now, you would have had those locked down on most of your smartphone launches for the whole of the back half. Is that not the case and then kind of what's linked to that really is that, if that's a positive 3.5 million smartphones in Q3, you probably have to do 5 to 6 million to hit the high end of your range and that ramp in Q4, what has given that confidence is that carrier promotions aren't booked down right now. Is it geographic expansion, is it just product SKUs or how should we think about that?

Dr. Sanjay K. Jha - Co-CEO, Motorola and CEO, Mobile Devices and Home business: I have a pretty good visibility – I don't have very good visibility. Let me just go back to the guidance for one second. I feel I will come back to this subject for the third time. I just want to be clear. There is supply constraint. There is some uncertainty and macroeconomic and there is, in my mind at least, there is tremendous amount of uncertainty about the competitive landscape and how much money each of the OEMs or the OS providers will spend in the marketplace in fourth quarter. I think that there is some uncertainty. All those three things are making me somewhat more careful in my guidance and so I want you to understand the guidance part. To the question about what the carriers will do? Yes, I have pretty good visibility, but I don't think that we are yet clear as to how the dynamic between RIM OS, iPhone, Windows Mobile and Android will play out in the fourth quarter at each of the carriers and where the dollars will go and how much money some of the other OS providers will put behind that. I think that's creating some uncertainty. It will be very competitive marketplace. In terms of your numbers, I feel again, very confident about the range and I think that I have enough visibility to say that that range is a good range to communicate to you right now.

Kulbinder Garcha - Credit Suisse: Just one very quick follow-up, at what point do you think – this is for both Greg and Sanjay, I guess, and Ed, at what point will Motorola – will you communicate how the balance sheet of the two businesses will look? Is that something we have to wait right until the before the separation next year do you think or could we find out sooner?

Edward J. Fitzpatrick - SVP and CFO, Motorola: We're still going through that. As you know, we're going to be filing amendments to the initial Form-10 that was filed. We're working through that and in the next filing or two, amendments that we make we will be providing more color on the details of the balance sheet and such items will get finalized obviously – it won't get finalized until we do the actual separation, but we will provide more color once we sort through that over the next quarter or two.

Dean Lindroth - Corporate VP, IR: Thank you, everyone. I want to remind all those on the call that an audio replay and this morning's slide presentation will be available on our website shortly after this call. During this call, we've 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 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. Plans and progress relating to the separation of Motorola's businesses into two independent publicly-traded companies and the sale of our Networks business; guidance from Motorola's earnings per share; future strategic plans; expected timing for the announcement, launch and shipment of new products; expectations for the volume and financial impact of handset shipments, including smartphones; guidance for future sales, operating expenses, expected cash positions, margins, profitability, ASP, demand trends or market share for each of Motorola's businesses and their products; future component supply constraints; and the impact of the sale of our Networks business on future LTE public-safety system. Because forward-looking statements involve risks and uncertainties, Motorola's actual results could differ materially from those stated in these forward-looking statements. Information about the factors that could cause such differences can be found in this morning's press release on pages 17 through 29 and Item 1A of Motorola's 2009 Annual Report on Form 10-K and on Motorola's other SEC filings. Thank you for joining us. This now concludes our conference call.

Operator: 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.motorola.com/investor. We thank you for your participation and ask that you please disconnect your lines at this time. Have a wonderful day.