Citron Research, the firm known for exposing fraud allegations at Valeant Pharmaceuticals, has a new target: Motorola Solutions.
Motorola Solutions saw its stock take a dive Tuesday after short-seller Citron alleged that the company was price gouging the U.S. government by selling overpriced emergency radio equipment to law enforcement agencies. (Motorola Solutions sells police radios, walkie-talkies, body cameras, and other equipment to emergency workers.)
Citron said in a report Tuesday that the “bulk of [Motorola’s] profits come from selling overpriced handsets into its single-source contracts in the U.S.” and that it charges U.S. companies "five times the price" of its European clients. The reported added, “What would President Trump think?” in an apparent attempt to catch the eye of the president who has been critical of the country’s expensive government contracts with other businesses. Trump has been publicly critical of the cost of Lockheed Martin's stealthy F-35 fighter jet, for example.
Citron Founder Andrew Left said in an interview on CNBC that Motorola is "egregiously ripping off the government," adding we have a president who is very law enforcement-friendly, and a president who would look at this and...if you look at what he's talking about for the F-35 program and Lockheed, I mean that's a joke compared to what's happening here. This is a low-end walkie-talkie for $6,000."
Motorola said it “strongly disagrees” with Citron’s assessment, and “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.”
“We are proud of our longstanding relationships at the federal, state and local levels in the U.S. and with governments around the world,” the company continued. “Our government contracts are the result of robust competitive-bidding processes.”
Motorola’s stock fell yesterday 5.9% to $76.92, its biggest drop since May of last year.
The report poses a potentially larger threat to Motorola if Trump indeed decides to take issue with the company's pricing. Trump has been more than willing to publicly attack businesses via his Twitter account, having just blasted Nordstrom on Wednesday for dropping his daughter Ivanka Trump's clothing line. Some companies are even making emergency plans in the event Trump tweets about their business, and there's even an app that allows you to set alerts for when the president tweets about a publicly traded company.
