Motorola To Cut 4,000 More Jobs - InformationWeek
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5/30/2007
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Motorola To Cut 4,000 More Jobs

Besides reducing the workforce, Motorola said it plans to cut costs through a "prioritization of investments," among other items.

Motorola, which is trying to get its financial house in order in coping with falling mobile phone sales, said Wednesday that it would cut an additional 4,000 jobs in shaving another $600 million in costs.

The cellular-phone maker said the latest plans were in addition to its original target, announced in January, of $400 million in annualized cost reductions for this year that included scaling back the workforce by 3,500 people by June 30.

"We are confident that the steps we are announcing today, together with the actions that we have outlined previously, will further improve the company's financial and operational performance and create value for our stockholders," Tom Meredith, chief financial officer of Motorola, said in a statement.

The company said the $600 million in cuts would occur in 2008. Besides reducing the workforce, Motorola planned to reduce expenses through a "prioritization of investments, continuing discretionary-spending controls, general and administrative expenses and site rationalization."

"We are taking steps to ensure that, as these cost reductions are implemented, there will be no adverse impact on customer service and support, product quality and those research and development programs that are expected to contribute meaningfully to Motorola's revenues, profits and cash flow in 2008 and beyond," Greg Brown, president and chief operating officer of Motorola, said.

As a result of the latest announcement, the company expected to record additional restructuring charges of about $300 million, or 8 cents per share. The charges would occur over the rest of 2007, and consist mostly of severance and related expenses from the workforce reductions.

The financial problems of the world's second largest handset maker stem from pricing competition, particularly in the low end of the market, and a lagging product line for advanced cellular-phones that operate on carriers' high-speed networks.

In April, the company reported first quarter financial results that included lower than expected sales and a loss. "The performance in our Mobile Devices business in the first quarter is unacceptable and we are committed to restoring it to an appropriate level of profitability," Chief Executive Ed Zander said at the time. In trying to rejuvenate sales, the company this month unveiled a new version of its popular Razr phone.

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