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Motorola Shaves Jobs As Earnings Drop

Company Will Cut 3500 Jobs Due To Price War

      

Robust global demand for the latest cell phones saw Motorola’s revenues surge by 17% to a record $11.8 billion in Q4. However, the company’s net profit slumped 48% to $624 million, as the company was forced to slash prices to keep up with Nokia.


Still, Motorola shipped a record 65.7 million handsets in Q4, up 47% from the same quarter of 2005. Motorola CEO Ed Zander said he was "disappointed" with the quarterly earnings, before announcing the 3500 layoffs.

The 3500 lay offs represent about 5% of Motorola's global workforce of 67,000. On a conference call with industry analysts, Zander said it should save the company $400 million over the next two years. "We are doing the right things for long-term growth," he said. "We are assuming a traditional ASP (average selling price) decline" but forecast a return to double-digit operating margin in the second half of this year.

Motorola launched the Razr in 2004 as a luxury unit priced $500. The phone did a lotto help the company take the fight back to Nokia.  Still, the Razr can now be found for less than $50 in the U.S.

According to Zander the Razr is still very popular. "The area where we are missing is a very strong 3G product," he said.

Motorola estimated it had a 23 per cent share of the global mobile market in the fourth quarter, behind Nokia, which has also seen its earnings dip on the back of the price war.

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