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Motorola to cut 4,000 jobs

31/05/2007

Mobile phone giant Motorola has announced plans to cut a further 4,000 jobs as part of its ongoing attempt to reduce costs at the company.

In a statement yesterday the US-based firm said it expected to achieve additional annual savings of $600 million (£304 million) in 2008 as a result of reducing its workforce and other cost-cutting measures.

Motorola added that it was on target to achieve the $400 million (£202.5 million) target to reduce costs following the announcement of earlier job cuts in January.

The process implementing the 3,500 job losses announced at the beginning of the year is due to be complete by June 30th.

Last month Illinois-based Motorola announced its intention to outline further cost reduction measures by June.

Restructuring charges related to the job losses announced today, including severance payments, are expected to cost Motorola around $300 million (£152 million), or approximately $0.08 per share over the remainder of 2007.

The announcement of the job cuts comes as Motorola, the world's second-largest mobile phone manufacturer, struggles to defend its market share from competitors.

In January the company announced a 48 per cent drop in its fourth quarter profits, which fell to $624m (£316 million).

Announcing the job cuts, Motorola's chief financial officer Tom Meredith said: "Long-term, sustainable profitability is, and always has been, Motorola's top priority."

"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," he added.

Motorola president Greg Brown also stressed that the company was taking steps to ensure that there would be "no adverse impact" on the service and support offered to its customers as a result of the cost reductions.

However analysts have indicated that Motorola's problems will not be solved by cost-cutting alone.

"It will certainly help them return to profitability but it's not enough to get them to the double digit profit margins they seek," said Lawrence Harris of the Oppenheimer investment group.

"They need exciting new products," he added.

It is not yet clear where the job cuts at Motorola will occur.


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