Wednesday, Motorola Inc. (MOT) stated that it would cut 4,000 more jobs in 2009 primarily in its mobile phone business and reported a preliminary fourth-quarter loss amid weaker-than-expected handset sales.
The Schaumburg, Illinois-based company's announcement to terminate 4,000 employee positions adds up to the 3,000 job cuts revealed a month ago. The planned reduction that is expected to begin with immediate effect includes slashing approximately 3,000 positions associated with the Mobile Devices business and approximately 1,000 positions associated with corporate functions and other business units.
Motorola noted that the above mentioned workforce reductions plus other incremental cost-reduction initiatives announced earlier would result in an additional annual cost savings of approximately $700 million in 2009. Thus, including the $800 million of savings from other actions announced during the fourth quarter of 2008, the company anticipates an aggregate cost savings of $1.5 billion in 2009.
Co-Chief Executive officer of Motorola, Sanjay Jha, is of the view that the cost cutting measures would result in mobile device business to realize $1.2 billion savings in 2009.
The company expects to report a fourth quarter GAAP net loss from continuing operations in the range of $0.07 to $0.08 per share, including estimated net charges of approximately $0.06 per share. On average, twenty-seven analysts polled by First Call/Thomson Financial estimated earnings of $0.03 per share. Analysts' estimates typically exclude special items such as one-time gain or expense.
Motorola anticipates fourth quarter 2008 sales in the range of $7.0 billion to $7.2 billion. Analysts currently estimate sales of $7.51 billion for the quarter. The company stressed that the preliminary results do not include any charges related to the cost-reduction actions announced today.
Motorola reported $7.4 billion in cash by the end of 2008. Greg Brown, president & co-chief executive officer of Motorola said, "Our Broadband Mobility Solutions businesses remain strong, are substantial franchises and are continuing to perform very well. Today's actions will allow us to further reduce costs, improve operating cash flow and help ensure that Motorola remains competitive and financially strong during these challenging times."
Motorola, which dropped to fourth place in the global handset market in the previous quarter, stated that it shipped approximately 19 million handsets during the current quarter. The company said that sales were adversely impacted by continued weakness in end consumer demand and customer inventory reductions. However, Motorola underlined that its Enterprise Mobility Solutions and Home and Networks Mobility businesses continued to perform very well in a challenging environment.
The company plans to report fourth-quarter financial results on February 3, 2009.
Motorola closed Wednesday's trading at $4.11, down $0.21 or 4.86% on the NYSE. In after-hours trade the stock gained $0.04 or 0.97% trading at $4.15.
by RTTNews Staff Writer
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