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Jan 14, 2009

Motorola to Cut 4,000 More Jobs as Cellphone Sales Collapse by Half

Sales of Motorola Inc.'s cellphones crumbled in the important holiday season, dropping more than 50% from the year-ago quarter and prompting the company on Wednesday to announce that it was eliminating another 4,000 jobs.

Motorola is scrambling to stem losses in its flagship mobile devices division, which this quarter sold 19 million phones, down from 25.4 million in the third quarter and 40.9 million in the fourth quarter of 2007.


The company said that the cost reductions announced this quarter would save $1.5 billion this year.

The cuts, coming after a year of heavy job losses and repeated efforts to reduce costs, highlight the disarray at the Schaumburg, Ill., telecommunications-equipment maker, as it jettisons production of phone models based on its own software and works furiously to produce phones based on new software by the end of the year.

Motorola said Wednesday it would cut 3,000 jobs from its cellphone unit and another 1,000 jobs from the rest of the company. In October, Motorola announced 3,000 job cuts as part of a broader restructuring that also halted the launch of many upcoming phones.

"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," said Sanjay Jha, co-chief executive officer of Motorola.

"Additionally, we are 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," he added.

A slide in demand for midrange cellphones has hit Motorola hard, as consumers turn to Apple Inc.'s iPhone, Research in Motion Ltd.'s Blackberry devices and other smart phones on the high end, and cheaper models on the low end.

Motorola hired Mr. Jha in August with a remit to turn around the mobile division, after a bumpy year in which the company cut 10,000 jobs.

But the souring economy made the former Qualcomm Inc. executive's job much harder than expected and the company has since been slashing costs and axing thousands more jobs as its revenue tumbles.

The company also put plans to spin off its ailing mobile division on hold.

Last month, Motorola said it would freeze its U.S. pension plans and salaries, and take further steps to conserve cash amid plummeting demand for handsets.

Source : Wall Street Journal
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