Motorola to lay off 3,000 as part of $800M in cuts for '09

Layoffs primarily to come from handset division

Motorola Inc. officials confirmed today that $800 million in cuts planned for 2009 will require laying off about 3,000 workers, with a little more than two-thirds of those job cuts coming from the handset division.

About 3,000 layoffs will be made globally "across all businesses and functions" with a "little over two-thirds of these layoffs in the handset division," a spokeswoman said in an e-mail. The communications equipment maker had 66,000 employees at the end of 2007, she said.

Motorola co-CEOs Greg Brown and Sanjay Jha discussed the $800 million in cuts for 2009 yesterday during a third-quarter earnings call with analysts but never mentioned layoffs during the 65-minute session.

But Motorola's problems began many months ago and stemmed from an unprofitable handset division, now overseen by Jha.

Jha spoke indirectly about layoffs yesterday when he mentioned the value of the current group of handset engineers and designers at Motorola. They have done a "wonderful job in a limited sphere," Jha said, but he noted that Motorola instead needs to have its designers build phones with improved users interfaces and services to compete with the iPhone and other new devices.

Jha, who was hired in August with the task of spinning off the handset division, also announced that the first Android phone from Motorola should be ready for the 2009 Christmas buying season.

Ellen Daley, an analyst at Forrester Research Inc. in Cambridge, Mass., said the layoffs are necessary, even though they will obviously be hard on the individual workers. The layoffs also serve as an example of how highly qualified engineers are not immune to job disruptions.

"They have to do something at Motorola," she said. "They are losing market share, they are bleeding, and they are inefficient. Job cuts happen when you are not making enough money to support the jobs."

The cuts are most directly designed to show shareholders that Motorola is taking steps toward profitability. If economic conditions improve enough, "they are going to be able to hire people," Daley added.

Daley, who has visited engineers and labs run by Motorola for several years, said the engineering culture at the company has tended to be in favor of fostering "creativity and ingenuity," which isn't practical in difficult financial times like these, especially with a slew of new smart phones coming on the market from competitors.

"If you have creativity and ingenuity as such a core component, it can be a downfall," said Daley, who added that she was trained as an electrical engineer. "Motorola engineers were often off in their little silos saying things like, 'I found the coolest thing,' but what's the applicability of that? They really need to march like a band together" toward a common purpose or set of products, she said.

Copyright © 2008 IDG Communications, Inc.

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