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As part of its plan to improve the companys bottom line, Motorola announced May 30 that it plans to cut an additional 4,000 jobs this year, less than six months after its announcement that it would eliminate 3,500 jobs by the end of June.
Total job cuts for this year equal about 11 percent of the mobile phone makers total work force. Motorola forecast $600 million in annual cost savings in 2008 as a result of the job cuts and other spending control measures. Motorola expects to make the 4,000 cuts by the end of 2007.
The company, based in Schaumburg, Ill., also noted that its previously-announced work force reduction of 3,500 jobs will be completed on schedule by June 30. It said it was on target to save $400 million from these layoffs, announced at the beginning of this year.
“Long-term, sustainable profitability is—and always has been—Motorolas top priority,” said Tom Meredith, Motorolas chief financial officer in a statement.
“Todays actions are an update to the commitment we made during our first-quarter earnings conference call—to drive out additional costs—and a continuation of the plan we announced in January. We are confident that the steps we are announcing today, together with the actions that we have outlined previously, will further improve the companys financial and operational performance and create value for our stockholders.”
The worlds number two cell phone maker, Motorola posted its first quarterly loss since 2004 this spring in the face of increased competition from other companies models and declining prices, despite healthy sales. Its Q1 net loss of $181 million ran in stark contrast to a profit of $686 million in the Q1 2006.
The company expects to record additional restructuring charges of approximately $300 million, or approximately $0.08 per share in connection with the May 30 job cuts.
The charges are expected to be incurred over the remainder of 2007 and will consist primarily of severance and related expenses resulting from the work force reductions.
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