Two-Pronged Initiative At Motorola: Layoffs And Better Smartphones

News was delivered to Wall Street analysts in the wake of reporting a 48% drop in profits Friday.

January 23, 2007

2 Min Read
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Motorola is embarking on a drive to shore up profits by laying off 5% of its workforce amid a new drive to stimulate demand for high-end smartphones.

The company announced the developments at a Wall Street analysts meeting in the wake of reporting a 48% drop in profits Friday. In its fourth-quarter financial report, Motorola said net earnings declined to $624 million from $1.2 billion in the previous year's fourth quarter. Sales revenue for the quarter jumped 17% to $11.79 billion.

"We are disappointed with our fourth-quarter operating earnings performance," said chief executive Ed Zander in a statement. "However, the company generated strong revenue growth and met or exceeded our goals in many areas during the quarter."

Stock market analysts covering the company focused on demand for Motorola's Razr. Zander said sales of the popular handset remain robust, while some analysts complained that prices for the Razr were falling. Moreover, the industry is focusing warily on competition looming from Apple's iPhone smartphone, which is due to be delivered in June.

A keynote speaker at the Consumer Electronics Show earlier this month, Zander came away from the Las Vegas show more determined than ever to boost Motorola's efforts in mobile communications, according to media reports. Motorola's mobile phone chief, Ron Garriques, said the company has several advanced smartphones in its pipeline.In its fourth-quarter report, Motorola reported results for its mobile devices unit that were mixed -- sales were up 19% to $7.8 billon, but earnings dropped to $341 million from $663 million in the comparable period in the previous year.

As for the layoffs, Motorola said they will be carried out on a global basis. The 3,500 drop in head count is the largest employee cutback since 2001 when the company announced it would trim its workforce by 30,000 employees.

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