Mobile & Wireless

Motorola Shaves Jobs As Earnings Drop

Company Will Cut 3500 Jobs Due To Price War

by Telecommunications Magazine Staff

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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