Motorola Solutions Falls After Citron Alleges Price-Gouging

  • Short-seller trying to summon attention of President Trump
  • Company says Citron made ‘false,’ ‘misleading’ assertions
Photographer: Chris Ratcliffe/Bloomberg

Motorola Solutions Inc. stock fell the most in nine months after short-seller Citron Research alleged price-gouging of U.S. government agencies in an effort to draw President Donald Trump’s attention to the company.

“What would President Trump think?” Citron said in the report posted online Tuesday. The president has sent the shares of other companies plummeting after tweeting that they were giving unfair terms to the U.S. government or outsourcing jobs abroad.

Motorola, one of the largest suppliers of communications equipment to first responders, enjoys an 83.6 percent gross margin on handset sales in the U.S., while device sales in Europe are at 9 percent, according to Citron.

“While Motorola has many operating divisions, the bulk of its profits come from selling overpriced handsets into its single-source contracts in the U.S.,” Citron said in the report. Motorola Solutions, in a statement, said it “strongly disagrees” with the short-sellers’s assertions.

The shares fell as much as 5.9 percent to $76.92, their biggest intraday drop since May 2016. The stock had increased 30 percent over the past year through Monday.

‘False and Misleading’

“Citron has made numerous false and misleading statements,” Motorola said in its statement. “Of note, Citron’s comparisons to products and price points in Europe and other locations are baseless, as different countries have different standards and require different technologies.”

Motorola Solutions split in 2011 from Motorola Mobility, the phone maker, which was sold to Google and eventually Lenovo Group Ltd. Motorola Solutions supplies police radios and walkie-talkies, dashcams, headsets and body cameras to emergency workers and field teams.

“We are proud of our longstanding relationships at the federal, state and local levels in the U.S. and with governments around the world,” said the company. “Our government contracts are the result of robust competitive-bidding processes.”

Citron, run by Andrew Left, has written critical reports on other companies including Valeant Pharmaceuticals International Inc. and Cyberdyne Inc., a medical-equipment maker.

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