Motorola will cut 3,500 jobs after a 48 percent drop in profit, it has announced.
Motorola is the world's second-largest mobile phone company, with sales rising 47 percent to 65.7 million units in the fourth quarter alone. That pushed the company's quarterly revenue to $11.79 billion from $10.04 billion last year, but the company's profit still sank sharply, from $1.2 billion to $624 million.
To boost profits, the company will cut 3,500 of its 70,000 employees, saving $400 million by the end of 2007, said CEO Ed Zander. He will also removing certain layers of middle managers. The jobs will be cut mainly from an internal reorganisation of the networks and enterprise group, and from overlapping general and accounting positions found in Motorola's recent acquisitions of Symbol Technologies and Good Technology.
The cuts will affect workers scattered through Motorola's global offices, and will be completed overthe first half of this year, according to a company spokeswoman.
Motorola agreed in September to pay $3.9 billion to acquire Symbol Technologies, a maker of portable bar-code scanners, and announced in November it would buy Good Technology, a producer of mobile email software. Together, the deals added about 8,000 people to Motorola, so these cuts will help ensure that the company maintains a constant headcount, Zander said.
Motorola made most money from sales of its Razr and Krzr mobile phones and its Q smartphone. In contrast, the networks and enterprise division - which produces two-way radios for government and emergency workers - produced a six percent rise in revenue to $3 billion. The connected home division rose 39 percent on sales of digital video set-top boxes and cable modems, but remained the smallest group with only $980 million in revenue.
The company's best chance for future profits can be found in mobile communications, said Zander. "This incredible world of mobile communications is just taking over," he said. "I just spoke in Las Vegas, and at the show there, ten years ago it was televisions, and five years ago it was PCs. Now just about every booth, whether it was traditional companies like Microsoft or computer companies, companies like ourself, or even consumer electronics companies, were all talking about Mobile Me, seamless mobility, the mobile Internet."
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