Struggling Motorola to cut thousands more employees

Most of those positions, 3,000 of them, will be cut from the Mobile Devices business while the rest are from corporate functions and other business units.  The cuts begin immediately and will join the 3,000 employees already let go in the fourth quarter of 2008 for a total of 7,000 in the last two months.  The latest round of cutbacks are intended to save another $700 million and join the $800 million planned savings from the summer quarter's restructuring efforts.

According to preliminary financial results, Motorola sold only 19 million phones in the fourth quarter, compared to 25.4 million in the third quarter and 40.9 million in the fourth quarter of 2007.  The company will announce official figures shortly after the end of the month.

"The actions we are taking today in our Mobile Devices business will allow us to further reduce our cost structure and positions us for improved financial performance in 2009," said co-chief executive Sanjay Jha, who was hired last August to manage the handset division.  "Together with these actions and the announcements made in the fourth quarter, the Mobile Devices business expects to recognize annual cost savings of approximately $1.2 billion in 2009."

The news isn't good for the future of Motorola's mobile devices, which have struggled against new products from other companies without a clear successor to the popular but outdated RAZR. Apple's iPhone in the fall overtook Motorola for the top-selling phone in the US despite a major price difference and the limitation of the iPhone to AT&T's network and Apple having sold just 6.9 million iPhones total during its last quarter.

Most Motorola phones are low- to mid-range devices, with most of its smartphones based on Microsoft's Windows Mobile. Its future smartphones are expected to run Google's Linux-based Android platform.

In contrast to the loss-making Mobile Devices group, the company reports that its Enterprise Mobility Solutions and Home and Networks Mobility businesses have fared well.

The last two months have seen Motorola cut 7,000 jobs.  and have contributed to a total of about 17,500 eliminated positions in the last half-decade as the company scales back from the heights of its success.  The company employed as many as 150,000 staffers worldwide at the beginning of 2000.  

At press time, Motorola stock was up 6.33% to $4.37 per share in a reaction to the company's cost-cutting efforts.