Motorola plans another round of layoffs
Struggling handset maker plans to cut another 4,000 jobs and warns that weaker-than-expected handset sales would lead to a fourth-quarter loss.
Motorola announced Wednesday that it plans to cut another 4,000 jobs, or about 6 percent of its workforce, and warned that weaker-than-expected handset sales would lead to a fourth-quarter loss.
Motorola said 3,000 jobs would be eliminated from its handset unit, while another 1,000 jobs would be cut from the rest of the company. The cuts announced Wednesday are in addition to 3,000 job cuts Motorola announced in October as part of a broader restructuring that also halted the launch of many upcoming phones.
"The actions we are taking today in our Mobile Devices business will allow us to further reduce our cost structure and positions us for improved financial performance in 2009," Sanjay Jha, co-chief executive officer of Motorola, said in a statement. "Together with these actions and the announcements made in the fourth quarter, the Mobile Devices business expects to recognize annual cost savings of approximately $1.2 billion in 2009."
"Additionally, we are making good progress in developing important new smart phones for 2009 and are pleased with the positive response from our customers to these new devices," he said.
Motorola expects the latest cost-cutting to result in $700 million in new savings, which when combined with a previously announced plan for $800 million in cuts, brings the total projected savings to $1.5 billion for 2009. The company also warned that its fourth-quarter revenue would come in between $7 billion and $7.2 billion, short of the $7.5 billion analysts had been expecting.
Motorola, which has seen its global handset market share steadily decline, reported sales of 19 million phones, down from 25.4 million in the third quarter and 40.9 million in the fourth quarter of 2007.
Jha, who had been a top executive at Qualcomm, was hired last August to turn around the company's struggling handset business. But even with good leadership Motorola's battle for survival will likely be made more difficult by the current state of the world economy.
Motorola recently postponed the planned spin-off of the handset division into its own company.