Sunday January 28, 2007

Motorola announces 3500 job cuts as profits slump 48%

channelnewsasia.com :

Motorola, the world's second-largest mobile phone maker, announced 3,500 job cuts after reporting a sharp fall in earnings due to an industry price war. Motorola shipped a record 65.7 million handsets in the three-month period, up 47% from the same quarter of 2005. But its quarterly net profits slumped 48% to 624 million dollars, as the company was forced to slash prices to keep up with competition for share of a market that is dominated by Finland's Nokia.

Motorola chief executive Ed Zander said he was "disappointed with our fourth-quarter operating earnings performance," before announcing the 3,500 layoffs in a bid to slash costs. The figure amounts to 5% of Motorola's global workforce of 67,000. Zander said it should generate savings of 400 million dollars over the next two years.

The tale of Motorola's star model, the Razr phone, is emblematic for an industry that has been slashing prices to woo customers now that mobile phones have become ubiquitous in many societies. Motorola launched the Razr in 2004 as a luxury model priced at 500 dollars. But the phone, which did much to help the company take the fight back to Nokia, can now be found for less than 50 dollars in the United States.

(2007-01-28 15:07:12 SGT) [Biz] Permalink

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