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Moto Cuts Another 4,000

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor

Motorola Inc. (NYSE: MOT) announced last night that it plans to cut another 4,000 jobs as it attempts to achieve $1 billion in cost savings through 2008.

The move comes after the world's second largest cellphone maker reported a first-quarter net loss of $181 million in April. Many of Motorola's problems can be laid at the feet of its handset division, which posted sales down 15 percent to $5.4 billion year-on-year in the first quarter. (See Motorola on Rocky Road.)

The company has already said it isn't expecting its fortunes to turn around in the first half of the year but expects things to improve in the last six months of 2007.

To that end, the Schaumberg, Ill.-based networking company noted that its previously announced workforce reduction of 3,500 will be completed on schedule by June 30 and that it is set to achieve the $400 million in yearly cost savings announced in January. (See Motorola's Handset Headache and Motorola to Cut Handset Staff?)

Motorola's handset division is searching for another smash hit like the RAZR to boost its bottom line. The 2004 release of the RAZR helped drive Motorola's profits to record highs and its share price above $26, a five-year high, in October of last year. The firm, however, hasn't yet been able to follow the RAZR's success and maintain healthy margins in an ever more competitive market. (See The Perils of Being Slim.)

The company recently unveiled a second version of the slim phone design, the snappily named RAZR 2, which it is hoping will regain some of Motorola's earlier handset success. (See The Next Cut.)

— Dan Jones, Site Editor, Unstrung

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