Mobile phone giant Motorola has said it is to cut 4,000 jobs, roughly 6 per cent of its workforce, in the face of the economic downturn and waning demand. It also warned it would make a fourth-quarter loss as sales of mobile phones were weaker than expected.
The firm had cut 6,700 jobs in 2008. These latest cuts include about 3,000 posts in the mobile-devices business and 1,000 jobs from other units. Since 2007, Motorola has reduced its workforce by about 16,000, joining AT&T Inc., Verizon Communications Inc. and Sprint Nextel Corp. in slashing jobs.
AT&T said last month it would cut 12,000 jobs, or 4 per cent of the workforce, as the economy falters. A few days later, Sprint said it would cut jobs throughout its units to bolster profit margins. Verizon is nearing the end of a three-year plan to eliminate 7,000 jobs from its business division. (See: AT&T to cut 12,000 jobs)
Motorola said the move brought planned cost savings in 2009 to $1.5 billion. That figure includes $700 million of new savings on top of a previously announced plan to cut $800 million in expenses.
"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," co-CEO Sanjay Jha said in a statement. He added that the company is "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."
Motorola has seen its flagship wireless device business come under attack by a combination of the economic slowdown as well as blistering competition from rivals.
Overall sales of cell phones have been slowing while smart-phone devices such as the BlackBerry and iPhone take market share. By contrast, Motorola has lacked a must-have product since the introduction of the popular RAZR five years ago.
Motorola said it sold about 19 million handsets in the fourth quarter of 2008, down from 40.9 million in the fourth quarter of 2007. It put the poor handset sales down to weakness in consumer demand. The firm had dropped to fourth place in the global handset market in the third quarter with sales of 25.4 million.
Revenue in the fourth period fell to between $7 billion and $7.2 billion, Motorola said yesterday. Sales of $7 billion would represent a 27 per cent drop from a year earlier.
The company had a net loss of 7 cents to 8 cents, excluding some items. Analysts had estimated a loss of 1cent. The company said it ended the year with a total cash position of about $7.4 billion. It had reported $7.6 billion at the end of its third quarter. Full results will be reported on 3 February, Motorola said.