Motorola Inc, the second-largest US seller of mobile phones, cut another 4,000 jobs as consumer demand continues to languish under the strain of recession.
The mobile devices unit will account for about 3,000 of the job losses, Schaumburg, Illinois-based Motorola said yesterday in a statement. The reductions, which begin immediately, follow 3,000 cuts disclosed in October as the faltering phone business eroded the company?s profitability.
When contacted a Motorola India spokesperson said that that this was an overall announcement for the company?s global operations and nothing in specific context of Motorola?s India operations could be said.
Since 2007, Motorola has reduced its workforce by about 16,000, joining AT&T Inc, Verizon Communications Inc and Sprint Nextel Corp in slashing jobs. Motorola shipped half as many phones in the fourth quarter as a year earlier. The company expects to save about $1.5 billion this year from Wednesday?s cuts and those announced last quarter.
?It?s tough to turn something around in a good environment, it?s a lot tougher in a tough environment,? said Mark McKechnie, an analyst at Broadpoint AmTech Inc in San Francisco, who has a ?neutral? rating on the shares. ?The turnaround can hopefully start after this round of layoffs.?
AT&T said last month it would cut 12,000 jobs, or 4% of the workforce, as the economy falters. A few days later, Sprint said it would cut jobs throughout its units to bolster profit margins. Verizon is nearing the end of a three-year plan to eliminate 7,000 jobs from its business division.
The slumping economy led analysts at Citigroup Inc to predict last month that global mobile-phone sales will fall 13% this year, the first drop since 2001.
Co-chief executive officers Greg Brown and Sanjay Jha have frozen US pension plans and cut executive pay to lower costs. Jha has said he?ll use Google Inc?s Android software to create more advanced devices to challenge Apple Inc and Samsung Electronics Co, which took the market lead in the third quarter.
Revenue in the fourth period fell to between $7 billion and $7.2 billion, Motorola said in Wednesday?s statement. That missed the average $7.47 billion estimate of 22 analysts in a Bloomberg survey. Sales of $7 billion would represent a 27 percent drop from a year earlier.
The company had a net loss of 7 cents to 8 cents, excluding some items. Analysts had estimated a loss of 1 cent. Full results will be reported on February 3, Motorola said. Motorola shipped about 19 million handsets in the fourth quarter.
The company introduced its first touch-screen device, the Krave, in October to compete with Apple?s iPhone.
Later that month, Jha said the company had been too focused on ?bright, shiny objects.? Motorola would trim the number of operating systems to three and release an Android-based phone in time for the 2009 holidays, he said.
?If the environment?s still weak in the second half of ?09, then this could be a ?10 story,? Broadpoint?s McKechnie said.
Motorola lost its top ranking in the US mobile-phone market in the third quarter as the company?s share of sales slid to 21.1% from 32.7% a year earlier, according to researcher Strategy Analytics in Newton, Massachusetts. Sales at Samsung, based in Suwon, South Korea, rose to 22.4% of the market from 17.9%.