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Motorola, Nokia, Siemens AG, Universal Technical Institute and Apollo Group


Published on 2010-12-02 18:40:31 - Market Wire
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CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Motorola Inc. (NYSE: [ MOT ]), Nokia Corp. (NYSE: [ NOK ]), Siemens AG (NYSE: [ SI ]), Universal Technical Institute Inc. (NYSE: [ UTI ]) and Apollo Group Inc. (Nasdaq: [ APOL ]).

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Here are highlights from Wednesdaya™s Analyst Blog:

Motorola Announces Separation Date

Yesterday, Motorola Inc. (NYSE: [ MOT ]) declared the much-awaited date for splitting into two separate entities. This will happen on January 4, 2011 before the opening bell. Motorola had decided to split into two publicly traded and independent entities in January 2011. New segments will be called (1) Motorola Mobility, which will comprise Mobile Devices and Home Businesses and (2) Motorola Solutions which will comprise Enterprise Mobility Solutions and Networks Businesses.

The split will take place through a tax-free stock distribution to shareholders. Motorolaa™s entire outstanding debt at the time of separation will be assumed by Motorola Solutions. Motorola has also decided to sell most of its Network businesses to Nokia Siemens Networks, a 50-50 joint venture between Nokia Corp. (NYSE: [ NOK ]) and Siemens AG (NYSE: [ SI ]), for $1.35 billion.

Management announced that the share distribution will be made on January 4, 2011 before the market opens to all existing Motorola shareholders of record as of the close of the market on December 21, 2010. Motorola shareholders will receive 1 share of Motorola Mobility common stock for every 8 shares of Motorola common stock they hold.

Immediately after that, the company will initiate a 1-for-7 reverse stock split of Motorola common stock, which will become effective before the market opens on January 4, 2011.

On January 4, 2011, Motorola Inc. will change its name to Motorola Solutions Inc., will have a new ticker symbol of MSI, and will continue to trade on NYSE. Similarly, Motorola Mobility Holdings, Inc will get the ticker symbol of MMI and will also trade on NYSE.

We remain positive about Motorolaa™s proposed business restructuring and separation strategy. Business restructuring will enable the Mobile Devices and Home Businesses to provide advanced mobile media solutions and multi-screen technologies leveraging on the converged platform of seamless mobility, end-to-end video content delivery capabilities, and the Internet. On the other hand, the Enterprise Mobility Solutions and Networks Businesses will leverage the overall state-of-the-art wireless broadband mobility solutions architecture of Motorola.

Universal Technical Misses

Universal Technical Institute Inc. (NYSE: [ UTI ]) recently posted lower-than-expected fourth-quarter 2010 results. The quarterly earnings of 29 cents a share missed the Zacks Consensus Estimate of 39 cents, and dropped 9.4% from 32 cents earned in the prior-year quarter due to increased operating expenses.

Following this, a negative sentiment may be palpable among the analysts covering the stock, and we could witness a fall in the Zacks Consensus Estimate in the coming days.

The Zacks Consensus Estimate for the quarter was stable prior to the earnings announcement. Universal Technicala™s quarterly earnings underperformed the Zacks Consensus Estimate by 25.6%. However, in the four preceding quarters the company had a positive earnings surprise history, which oscillated between 4.2% and 68.4%, with the four-quarter average being 39%.

Behind the Headlines

Net revenue for the quarter climbed to $119.2 million, up 19.8% from the prior-year quarter, and also came ahead of the Zacks Consensus Revenue Estimate of $115 million. The increase in revenue reflects higher average undergraduate full-time student enrollment and rise in tuition fees.

The educational institute, which provides professional automotive, diesel, collision repair, motorcycle and marine programs, reported that average undergraduate full-time student enrollment surged 15.4% to 19,500 students. Student starts for the quarter fell 5% to 7,600.

Universal Technicala™s leading position in providing technical education to aspiring automotive professionals and its business model of working closely with leading original equipment manufacturers provide the company a competitive advantage. The companya™s sustained effort to expand educational programs helps it to boost enrollments, and in turn, the top-line.

However, management hinted that the regulation proposed by the Department of Education may moderate the growth of new students and average enrollments.

Recently, the Department of Education proposed that an educational program could only qualify for Title IV funds, if it helps in achieving gainful employment, which includes the criteria of loan repayment rate and debt-to-income ratios. The company derives a major portion of its revenues from federal student financial aid programs, the Title IV programs. The education institutions are also under the scanner due to the rise in the default rate of student loans.

The sector bellwether Apollo Group Inc. (Nasdaq: [ APOL ]) has also cautioned that enrollment in its first-quarter 2011 would drop by more than 40%, and withdrew its outlook for the fiscal year, citing an uncertain regulatory environment.

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