Motorola slices another 9,400 jobs

Dec. 19, 2001 – Schaumburg, IL – Motorola Inc. has announced another round of layoffs — 9,400 jobs, or more than 8% of its work force — as it heads toward the end of a fourth straight quarter in the red.

The slumping technology giant said the cuts are necessary to return it to profitability and insisted it is on track to do so in 2002, thanks largely to improvements in its recovering cell phone business, reported the Associated Press.

Motorola has now shrunk its work force by 32% — 42,900 jobs through layoffs and 5,500 through sales of businesses — from when it stood at 150,000 worldwide in August 2000.

The company is in the midst of its third restructuring since 1998 as it tries to lower operating costs and close the gap on cell phone industry leader Nokia. The weakened world economy also has weighed heavily on Motorola’s bottom line, although industry experts say the company is to blame for much of its woes.

The latest round of job cuts, to be made over the course of 2002, include 4,000 from its semiconductor operations, 1,300 from its equipment manufacturing businesses, and another 4,100 distributed companywide.

The semiconductor employees are losing their jobs at unspecified manufacturing facilities that the company plans to phase out in 2002.

Motorola has confirmed it is on track to meet its October guidance for the 4Q01, which will again end in an operating loss. It warned it now expects a slightly greater-than-expected loss of $0.11 to $0.14 a share in 1Q02 before its anticipated return to profitability begins.

The job cuts and other measures are being taken as part of the continuing restructuring, and are seen as saving the company $865 million next year and about $1.1 billion annually thereafter, the Associated Press reported.

Christopher Galvin, chairman and CEO, said he regretted the continuing layoffs but sees them as necessary for a “leaner, more flexible, and more profitable company” in an unpredictable global environment.

He told the Associated Press that the current “extraordinary” technology cycle, “when coupled with the overall softening of the global economy, dictates that the company must continue to improve its overall efficiency and competitiveness in order to return to profitability.”

Galvin said he is pleased with the progress Motorola is making in its long-cell phone business but is forced to remain conservative going into 2002. The company expects to be profitable for the full year next year, he said.

Company executives said on a conference call that they foresee a return to profitability in the third quarter.


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