Motorola to cut 3,000 jobs
Motorola said it would shed 3,000 jobs, or slightly less than 5 percent of its work force, and delay a planned spinoff of its mobile devices unit as it spends 2009 trying to develop smartphones that will excite the public.
Motorola, once the market leader, finds itself behind other handset makers because it did not design smartphones, as Nokia, Samsung and Apple did. Motorola had the best-selling cellphone by 2006, the Razr, but lost its lead by churning out updated models. When that phone’s popularity faded, Motorola had little to replace it.
It will not have much in the pipeline until late next year, and it will begin selling its first touch screen phone in the United States, the Kraze ZN4, this fall.
Motorola, based in Schaumburg, Illinois, said it lost $397 million, or 18 cents a share, in the third quarter, compared with a profit of $60 million, or 3 cents a share, a year ago. Sales fell 15 percent, to $7.48 billion, from $8.81 billion a year ago. Net cash was $3.4 billion, compared with $3.6 billion in the second quarter.
The mobile devices division was the hardest hit. Sales fell 31 percent, to $3.1 billion, from $4.5 billion a year ago. The division reported an operating loss of $840 million, compared with a loss of $248 million in the quarter a year ago. Jha said the division planned to cut $600 million next year, or about three-quarters of the overall $800 million in cuts planned companywide.
The company began the year with 66,000 employees, but according to government filings, 4,800 employees affiliated with Motorola were laid off in the first nine months of the year.
Motorola plans to open an office in Silicon Valley to be near Google engineers and another in Seattle to work more closely with Microsoft. Motorola also makes set-top boxes and products used by businesses and law enforcement officials for scanning and fingerprinting, as well as data and video communications systems for public agencies like fire departments. It is the more profitable side of the business.
Last spring, Motorola announced it would separate its mobile phone business from the rest of its operations in 2009. But the company has called off plans to do so next year, in part because of the weak economy.
The company also said it lost $141 million in its Sigma Fund, an institutional money market fund, because of faltering investments in, among others companies, Lehman Brothers and Washington Mutual.
From IHT
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