Motorola Job Cuts Grow, but Outlook Gives Stock a Boost
Motorola Inc.’s push to cut costs and dig out of a deep slump claimed 4,000 more jobs Thursday while also providing investors with new hope that its ailing cellular phone business may be edging toward recovery.
The telecommunications giant’s stock leaped 15% to a five-month high despite its warning that it is headed for a third straight money-losing quarter on top of the $232-million operating loss it reported Wednesday.
Christopher Galvin, Motorola’s chairman and chief executive, maintained that the company is on track for a turnaround because of cost-cutting initiatives and signs of improvement in the cell phone business.
The latest evidence of cutbacks came when company officials said the work force is being reduced by 30,000 from 147,000 employees at the end of 2000--an increase from the previously targeted 26,000 cuts. President Robert Growney told analysts the cuts will be achieved by year’s end, but did not elaborate.
The cuts could come through attrition, layoffs or asset sales, spokesman Scott Wyman said.
Technology analysts were cheered by Motorola’s upbeat view of future cell phone prospects, including hopeful early signs for its new products and an estimate that industrywide sales aren’t slowing as badly as thought.
Its battered stock jumped $2.48 to a five-month high of $18.15 on the New York Stock Exchange.
Motorola anticipates an operating loss of several cents a share in the third quarter. Analysts surveyed by First Call/Thomson Financial were expecting it to break even.
Motorola’s cell phone operation has been plagued by flawed marketing strategies, high costs and slowness in getting products to market, enabling Finnish rival Nokia to take a big lead in market share--roughly 35% to Motorola’s 13%.
Cell phone sales should edge up 5% in each of the next two quarters, the company said--growth that industry-watchers called encouraging even if it reflects normal seasonal increases.
“They’ve done a very good job in the handset business, driving growth,” said analyst Jeffrey Schlesinger of UBS Warburg.
