Motorola is cutting 3,500 jobs and taking other steps to reduce costs after misjudgments on pricing and sales forecasts for its high-end phones contributed to its least profitable quarter since 2004, an Associated Press report said.
The Associated Press report said the move came as the world's No. 2 mobile phone maker reported a 48% decline in fourth-quarter earnings, to $624 million, on a steep drop in profitability in the handset business.
CEO Ed Zander was quoted as saying that the can save Motorola about $400 million over two years by eliminating 5% of its work force.
But while calling the most recent results disappointing, Zander dismissed any need for a change in overall strategy as some analysts urged when the shortfall in sales and profits was disclosed two weeks ago.
He said continuing strong demand for the trend-setting Razr and its offshoot phones puts the company in position to return to double-digit operating margins in the second half of 2007, the report said.
He also dismissed suggestions that the Razr, which turned around the company's fortunes two years ago, is running out of momentum.The decision to shed jobs comes after Motorola's recent $3.9 billion acquisition of Symbol Technologies, a maker of barcode scanners and handheld computers, the report said
The cuts are to be spread across the company globally and completed in the first half of 2007, the report added.