In an extension of a cost-cutting program it began in January, Motorola said Wednesday it would lay off 4,000 more workers.
The move will help the company to save $US600 million annually starting in 2008, including additional money-saving measures like prioritizing its investments, continuing discretionary-spending controls, cutting general and administrative expenses and site rationalization.
Although it trails only Nokia in sales of wireless handsets, Motorola has struggled to translate its sales into profits. The company began this restructuring program after watching its profit drop sharply, from $US1.2 billion in the fourth quarter of 2005 to $US624 million for the fourth quarter of 2006. The results were even worse for the first quarter of 2007, as Motorola posted a loss of $US366 million compared to its profit of $US849 million for the same period a year ago.
In a search for change, the company replaced its chief financial officer in March. At that time, chief executive Ed Zander blamed the problems on dropping prices for low-end cell phones, and Motorola's decision to give up market share instead of entering a price war with competing vendors.
Also on Wednesday, Motorola said it would finish making the 3,500 job cuts it had perviously announced by June 30, contributing to an estimated $US400 million in annual savings. The restructuring will also incur its own costs. Motorola will subtract a one-time charge of $US300 million from its savings, to pay for severance packages and other costs of the workforce reductions.
"Today's actions are an update to the commitment we made during our first-quarter earnings conference call -- to drive out additional costs -- and a continuation of the plan we announced in January," Motorola's chief financial officer Tom Meredith said in a release.
Meredith promised the cuts would not distract Motorola from keeping its focus on long-term plans in customer service and support, product quality and research and development.