Motorola to lay off 3,000 workers, postpone spinoff
Whipsawed workers at Motorola Inc.'s headquarters in Schaumburg and its Mobile Devices center in Libertyville again will be among the casualties when 3,000 more are laid off worldwide.
Motorola co-CEO Greg Brown said Thursday the troubled communications company must trim another $800 million during 2009, in addition to the $1 billion cut this year.
About two-thirds of the new layoffs will come from the foundering phone business, but a "small handful" will be cut in Libertyville and Schaumburg, Brown said.
The rest will be from other businesses and corporate functions and will continue now through March.
"The majority of the layoffs will be from outside of Illinois," Brown said during an interview.
The company had about 66,000 workers last year, compared to 147,000 in 2000.
The new round of layoffs were told to individual reporters after the company announced it had lost $397 million during the third quarter and saw its mobile devices sales and world dominance continue to erode.
Handset sales of 25.4 million units were down more than 30 percent from a year ago. Its global market share also continued to decline, now at 8.4 percent compared to 13 percent last year.
Co-CEO Sanjay Jha said the tough economy, a foundering telecom industry, stiff competition and other global pressures have forced them to continue the restructuring,
"The restructuring decisions we made today are the best at this time and based on our projections for 2009," Jha said during an interview. Jha has headed the Mobile Devices phone business since August, when he promised changes within 90 days.
As the global economy worsens and consumers tighten their wallets further, Motorola also will do the same, Jha said.
"It's clear that the economy is uncertain in the United States and globally for 2009, but we will do the best thing for our company and our shareholders," Jha said.
Besides the layoffs, Brown and Jha said the spinoff of its Mobile Devices business will be indefinitely delayed from its targeted third quarter 2009 time frame. Jha added they would update Wall Street "at a time that is appropriate."
In the meantime, Motorola also plans to reduce the number of platforms it now has for its phones and will simplify newer versions,
including the introduction of Google Android and Windows Mobile phones.
Motorola also plans to open an office in Seattle to work more closely with Microsoft, said Jha.
Continued cost cutting will be necessary to improve profitability and provide a more compelling line up of phones, for which customers are willing to pay a premium, said Rick Franklin, telecom analyst with Edward Jones.
"We are happy to see more cost cutting coming from Motorola as improved profitability of the handset division is critical," said Franklin.
"However, we also need to see continued innovation, so management must be careful to cut fat and not bone. Any cost cutting imitative will likely involve further job reductions. Going forward, we'd like to see continued improvement in its handset product offerings and a stabilization in market share all balanced with a more streamlined expense structure and greater profitability. This is a tall order, but one that Motorola needs to improve its overall competitive positioning."
Year: 2008/2007
Sales: $7.5 billion/$8.8 billion
Net earnings: -$397 million/$60 million
Earnings per share: -18 cents/2 cents
Source: Motorola Inc.
<div class="infoBox"> <h1>More Coverage</h1> <div class="infoBoxContent"> <div class="infoArea"> <h2>Related links</h2> <ul class="moreWeb"> <li><a href="http://www.motorola.com/mediacenter/news/detail.jsp?globalObjectId=10378_10307_23&pageLocaleId=2026">Full Motorola press release</a></li> </ul> </div> </div> </div>