14 DAY TRIAL // Motorola Inc. is reported to plan on cutting 4,000 more jobs as a result of lower device shipments caused by weakening demand in the market. The U.S. second-biggest seller of handsets seems to be greatly affected by the global economic recession, as this is the second wave of layoffs announced during the past three months.
The company is reported to have lowered its workforce with about 16,000 employees since the start of 2007. Fellow names in the industry, like AT&T Inc., Verizon Communications Inc. and Sprint Nextel Corp., are also on a layoff spree. According to news on the Web, during the fourth quarter, the phone maker only managed to ship half of the devices it sold a year before. According to analysts at Citigroup Inc., the economic turmoil is expected to lower global mobile-phone sales by 13 percent this year.
“It’s a symptom of the market and Motorola’s position in handsets,” said Mark McKechnie, an analyst at Broadpoint AmTech Inc. in San Francisco, who has a “neutral” rating on the shares. “They are trying to figure out what size the company should be. It’s good to see that they are saving money.”
Motorola's shares dropped 5 cents to $4.06 in extended trading. In the course of last year, the company registered a 72 percent drop in shares. The new layoffs should help it reduce costs to about $1.5 billion this year, coupled with the job cuts announced in the fourth quarter. Today's layoffs should allow it to save about $700 million.
During Q4, Motorola's sales were down by 27 percent compared to the year before, totaling $7 billion for 19 million handsets shipped. During the same time frame, the company had a net loss of 7 to 8 cents, while previous estimations placed the loss to only 1 cent.
According to Sanjay Jha, co-chief executive officer, the company will try to use Google Inc.’s Android software for the development of new handsets to compete with Apple Inc. and Samsung Electronics Co. Motorola lost the first position in the U.S. market to Samsung in the third quarter, with the company's market share having dropped from 32.7 percent a year earlier to only 21.1 percent, while Samsung rose its share from 17.9 percent to 22.4 percent.