Motorola cuts 1,000 positions

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Motorola Inc. Chairman and Chief Executive Edward Zander has preached cost cutting since he arrived on the job in January.

Now he's showing that he's serious.

The company will eliminate 1,000 jobs, or about 1 percent of its global workforce, from three major businesses and its Schaumburg headquarters, taking a $50 million pre-tax charge in the third quarter to cover severance benefits, according to a Tuesday regulatory filing.

The cuts, coming when Motorola's sales are growing, are a sharp reminder that big corporations are churning mills that shed jobs even in good times and hire new workers even while laying off others.

The company's stock gained 1 cent on the news, to close at $17.51 Tuesday. That's comfortably above the $15.05 level on Jan. 5 when Zander took over, but well short of the 52-week high of $20.89 reached in the spring.

The aim of the job cuts is to eliminate projects and people whose skills no longer are deemed critical to the company's focus on mobile communications, the filing indicated.

None of the cuts touch Motorola's surging cell phone business, which is gaining market share but faces stepped-up competition from aggressive rivals such as Samsung Electronics.

Also spared is a related business that sells wireless networking gear.

"I think it's a good thing," Charter Equity Group analyst Edward Snyder said of the layoffs. "Motorola needs to get rid of some things and concentrate more on wireless."

These layoffs stand in stark contrast to the massive cuts from mid-2000 through 2002, when Motorola axed one-third of its workforce in an urgent push to stem billions of dollars in losses.

Observers who expected another big revamp after Zander was hired instead got a leader who eschewed bold strokes, while benefiting from earlier restructuring and a rebounding telecommunications market.

Motorola's sales jumped 41 percent in the second quarter, and profit increased more than sevenfold.

Zander, 57, a former Sun Microsystems Inc. executive, spent his first six months visiting customers and employees while retooling management processes and compensation to get Motorola's six businesses to act as one.

He used his CEO perch as a bully pulpit to preach that Motorola would overcome its rap as a slow-moving, stumbling behemoth by picking up its pace and improving execution.

He also talked about cutting costs. But only in the last several months did his top executives turn to what Motorola euphemistically called a "productivity improvement plan" in its Securities and Exchange Commission filing.

Job cuts in three units

The plan involves eliminating jobs in three businesses: Commercial, Government and Industrial Solutions, which sells emergency radio equipment; Integrated Electronic Systems, which sells navigation and other systems to automakers; and Broadband Communications, which sells television set-top boxes to cable operators.

Analysts speculated Tuesday that the bulk of the cuts are concentrated in the broadband business, which is based in Horsham, Pa., and has been losing market share to rival Scientific-Atlantic Inc.

Motorola also is cutting corporate headquarters jobs associated with its Texas-based chip business, which it took public in July as the first step in a spinoff. The remainder of Freescale Semiconductor Inc.'s shares will be distributed to Motorola investors by the end of the year.

Motorola spokeswoman Jennifer Weyrauch said most of the people affected by layoffs were notified in the last few months and will leave by the end of the third quarter, which is this week.

Severance packages are based on years of service and will include job counseling and placement services, she said.

Motorola continues to hire in engineering, marketing, technology and finance positions, she said. The company employs 88,000 worldwide, including 22,000 at Freescale.

Zander was unavailable for interviews Tuesday because of the federally mandated "quiet period" before a company announces earnings. Motorola is scheduled to report third-quarter results on Oct. 19.

In addition to the $50 million charge associated with the layoffs, Motorola expects to take a pre-tax charge of about $80 million to retire debt early, the filing stated.

The company also sold shares of Nextel Communications Inc. and Nextel Partners Inc. for a gain of about $218 million, the filing said.

Copyright © 2014, Los Angeles Times
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