Motorola to Cut 1,000 Jobs, Spins Off Semiconductor Division

Former chip group now operating independently as Freescale Semiconductor making some positions unnecessary, officials say.

CHICAGO (AP)—Motorola Inc. will cut 1,000 jobs worldwide and take a charge of $50 million for severance benefits as it completes the spinoff of its semiconductor division, officials said Tuesday.

The companys chip operations are now operating independently as Freescale Semiconductor Inc., and Motorola spokeswoman Jennifer Weyrauch said that made some corporate positions unnecessary.

"Were eliminating 1,000 positions around the world to better align our work force to support seamless mobility and in anticipation of the Freescale Semiconductor separation," Weyrauch said.

The majority of the job cuts are set to take place by the end of this week, Weyrauch said. Motorola employs 88,000 people worldwide.

The cuts also include jobs in Motorolas commercial, government and industrial solutions component, the integrated electronic systems area and broadband communications, the company said in a filing with the Securities and Exchange Commission.

Motorolas spinoff of its semiconductor division—its second largest behind cell phones—is expected to be complete by the end of this year. The money-losing unit accounted for $1.5 billion of the companys $1.8 billion operating loss in 2002.

Analysts say the cuts will help Motorola become more efficient.

"Motorola is a technology company; they have to continue to evolve and in order to drive that evolution, they have to redeploy their work force," said analyst Kevin Dede of Merriman Curhan Ford & Co. "They have to hire new people and get rid of some people who cant be redeployed."

Analyst Brian Modoff of Deutsche Banc Securities said he expects similar-sized cuts to take place as the company works to sharpen its operations.

"Theyve got to streamline and focus the company a bit more because theyre such a big technology conglomerate," Modoff said. "Theyre trying to make the company more cost-efficient."

According to the filing, the Schaumburg, Ill.-based company also expects to have $80 million in third-quarter costs related to paying off various debts.

Motorola shares dropped 18 cents to $17.32 in Tuesday trading on the New York Stock Exchange, where Freescale shares fell 25 cents to $14.25.

Freescale is based in Austin, Texas, where the 23,000-employee semiconductor unit was located.