MSI
#Sure.
The FX impact on pricing, it depends on regional specifics.
There's some impact in Latin America on pricing.
We haven't really seen any margin erosion or ASP reductions, so we've been containing the FX pressure, at least on pricing.
With respect to the FX impact in budgets, I think, was the second question.
Obviously interrelated, both questions.
What we've said in the past is that we expected an EPS impact of about $0.05 to $0.10 for the year with respect to currency movement with FX impacting BGM, or reducing the $175 million reduction, year over year, in cost.
Approximately a third of that is a result of the stronger dollar.
If we look at our BGM profile, about 40% of it right now is denominated in something other than USD.
So, in conjunction with the Services business and our efforts around moving to low cost centers, we've built in a hedge for FX movement, so it really doesn't impact the bottom line as much as it does the top line.
I think that, on the revenue FX impact, it's about $50 million in Q2.
We anticipate it being about $50 million in Q3.
And on the full year, given the spot rate, it's about $190 million.
I think that the only other thing I'd comment is, I think the more pronounced FX pressure have been a contributory factor to the compressed results in Latin America in particular.
But we're managing it accordingly and it's incorporated into the overall guidance we're providing.
And along that line, is we continue to monitor pricing.
ASPs have been holding, as <UNK> indicated.
So we really haven't seen it affect product pricing so to say, as <UNK> mentioned, just really the buying power because of Latin America being US dollar denominated for our projects and the impact of the currency there locally.
I think that ---+ good question, thank you.
As we said in February, we're emphasizing Smart Public Safety Solutions as well as Services, and I think the Silver Lake partnership is right in the sweet spot of extending and accelerating our existing strategy in this regard.
I think they bring significant expertise in technology products and information solutions.
They're smart, they're savvy.
I think they'll help us on surgical M&A, as well, both in terms of looking at the funnel of opportunity and executing on good deals potentially to supplement and complement what we already have there.
We have been acquiring already.
We did an analytics company a few months ago.
We did a command and control software company with emergency call works, that's gone very well.
We did a push-to-talk interoperable software company with Twisted Pair.
So I think Silver Lake will ---+ I think of them as accelerating and extending what we already have.
We're bringing in new talent into the Company.
We have a new CIO and many of the people in IT are new.
Tom Guthrie, who runs Smart Public Safety Solutions, has come in through an acquisition with Twisted Pair.
I feel very good about the relationship, the capacity, and the technology savvy that I think will be complementary to what we're doing already.
I think that's probably fair, but I would say that if there's something more material, and it's compelling and accretive, we'll consider that too.
So, exciting times for what we're doing going forward.
Just to make sure I understood, was your question around video.
Yes, I think video is a very compelling opportunity for us in many ways.
I mean, you see front and center all of the rhetoric and narrative around body cameras and capturing video information at an incident with first responders combining it with their communications.
Video is one of the critical components in our Smart Public Safety Solutions strategy.
Not just the edge devices that may capture it, but the analytics, aggregation, dissemination, and pushing of that the data and the high-bandwidth video into a first responder to a full-fledged complementary converged device.
So I think video is very important to what we're doing going forward.
I see it as growing in importance and I think that will be also front and center with the value proposition that we engage Silver Lake on.
I think the ---+ on the cost side first, I think I would characterize the $175 million of cost reductions this year as probably in the seventh or eighth inning of our journey on cost reductions.
Clearly, the majority of them are behind us.
And I think the team has done a really good job not just cutting expense but restructuring the business in a more thoughtful and simple way ---+ doing things that we don't need to do after selling the enterprise business, getting after footprint capacity requirement, duplication, there might be a little bit more there.
Going forward, we'll always be prudent on looking at the cost structure.
But as we pivot now, and especially with today's announcement with Silver Lake, I think of this Company's trajectory going forward more about growth, more about investment, and more about expansion.
<UNK>, this is <UNK>.
On the device versus infrastructure, devices in Q2 contracted slightly and infrastructure was up, Systems were up.
Importantly, though, devices in North America were up.
The contraction's really due to Latin America and the other geographies, not North America.
Yes.
I don't think that's a fair statement.
I think our focus has always been on growing the business and adding capacity and competency.
I think, <UNK>, it's a logical extension of the path that we've outlined, which is optimizing our balance sheet, which is a big part of today; improving the operating and the financial performance of the Company, which is also a big part of today; building backlog, which gives us momentum for growth.
So I look at this as a continuation of what's been my focus and management's focus, which is growing this Company.
Yes.
On FirstNet, I think we continue to work very closely with them.
We're actively participating and engaging with them through the draft RFP process.
By their own articulation, I think this will carry forward into an RFP ---+ another RFP, by the end of the year or early next year.
And I think that their whole initiative will be a very measured and elongated, and we're staying closely in touch with them along the way.
As a sidebar, in terms of LA-RICS and that public safety LTE deployment, I think we remain on track.
And Bob Schassler and his team have done a nice job accelerating what we need to get implemented by the requisite deadlines of that contract.
In terms of your last point on voice-over LTE, we've been specific in pointing out that there's voice-over LTE and then there's mission-critical voice-over LTE.
And we believe that mission-critical voice communications that are embedded in these private networks for LMR have a long, long life.
And public safety LTE, if you will, and instantiations therein, are additive to the LMR business, both domestically and internationally.
So, we feel good about our position and we'll monitor it going forward.
<UNK>, this is <UNK>.
On the margin question, our expectation for margin in Q3 and in Q4 is in line with what we've seen in prior ---+ certainly last year and in prior periods.
And I think on seasonality, I believe that our expectations on the second half of this year are generally comparable with last year.
On the tender, as <UNK> mentioned earlier, we'll see how it shakes out and after the tender closes out, there will be the opportunity for us to enter into, after the tender is completed, in an open market capacity, as we evaluate that accordingly.
Yes.
No change to the capital allocation framework that we outlined.
It's 10 business days, <UNK>.
Hi, <UNK>, this is <UNK>.
Actually, the strength has been across the board.
As we mentioned earlier, we've been getting strength in the systems business as well as the device business.
The PCR business last quarter was relatively flat, but it had been growing prior to that.
And again, if you think about overall North America, growth has been 4%, 6%, and 5% in the last three quarters.
So a little stronger than what ---+ or it's certainly at the high end of our expectations.
The federal business has also grown the last two quarters.
And we expect it to grow again in the second half and to have modest growth again for the full year.
So, I don't want to declare victory yet, but as we said, we thought that the narrow-banding effect had worn off.
And it looks like North America, even given, when we talk about North America, they're facing some FX headwinds of about $20 million in Canada.
But, across the board, seems to be good growth and solid, if you will, pipeline for where we're looking at the future.
I don't think, <UNK>, I don't they're new business opportunities.
I think the Silver Lake deal is more about bringing additional capacity for us to go achieve them and go seize them.
As somebody mentioned earlier, this is exactly consistent what we outlined in our financial Analyst Day in February.
So this is all about doubling down on software and services, more specifically Smart Public Safety Software and our Services business.
I don't think it's new.
I think it's a reaffirmation of our commitment and an acceleration therein.
In the guide ---+ so it's important to note, and as I said earlier the $2.5 billion and what we guided to for the year, and now it's $3.5 billion.
But it's also important to note that, from an accounting perspective, the Silver Lake investment, the shares represented in that investment, will also be included in EPS.
Thanks.
We made a number of forward-looking statements during the call that's included statements relating to the investment by Silver Lake and the use of proceeds and benefits thereof, the intent to commence a tender offer, our intent to maintain liquidity and investment grade, outlooks relating to sales, EPS, cost savings, operating leverage, operating cash flow and free cash flow as well as gross margins, effective in cash tax rates, currency, Public Safety LTE sales, regional growth, acquisitions, and capital returned share repurchases, as well as backlog.
Thanks for joining us today and we'll talk to you soon.
