Motorola to eliminate 4,000 jobs in struggle to revive its business

LOS ANGELES - Mobile handset maker Motorola Inc. said Wednesday it will cut 4,000 more jobs in 2009, in addition to 3,000 it announced last year.

The company said the move will save about $700 million a year starting in 2009 and total $1.5 billion in annual savings when combined with the previous cut.

Most of the new layoffs will hit the mobile-devices business, while about 1,000 jobs are tied to corporate functions and other business units.

The move is the latest cost-cutting measure by Motorola, which has been struggling to revive its business. In December, it announced it was freezing its pension plans and reducing executive pay.

The Schaumburg, Ill.-based company also said Wednesday it expects revenue for the fourth quarter to be between $7 billion and $7.2 billion because of continued weakness in consumer demand and customer inventory reductions.

Analysts polled by Thomson First Call expected, on average, $7.5 billion in revenue.

Shipments in the quarter hit around 19 million units, Motorola said. That's down 25 percent from the third quarter -- a rare and steep decline for the holiday season -- and off 54 percent from a year ago.

The company said it expects a fourth-quarter net loss from continuing operations of 7 to 8 cents per share, including 6 cents per share of restructuring costs and other charges. The estimate did not include new charges for the layoffs announced Wednesday, which could widen the loss.

Analysts were looking for a profit of 3 cents per share.

"The actions we are taking today in our mobile-devices business will allow us to further reduce our cost structure, and positions us for improved financial performance in 2009," said Motorola's co-chief executive, Sanjay Jha, in a statement.

Motorola shares fell 21 cents, or 4.9 percent, to close at $4.11 Wednesday, and were unchanged in after-hours trading following the announcement.

Douglas Ireland, an equity research associate at JMP Securities, said the company has failed to duplicate the success of the Razr phone.

In October, the company announced it would cut 3,000 jobs by April, most of them from the cell phone unit, and said it would focus on just three software systems: Microsoft Corporation's Windows Mobile; P2K, its own system used on the Razr phone; and Android, a free operating system from Google Inc.

Jha said Motorola will have an Android phone by the 2009 holiday season.

"Their new strategy for Android-based phones may be a winner, but it is at least two or three quarters from bearing fruit, which is an eternity on Wall Street," Ireland said.

Analyst Edward Snyder, the principal of Charter Equity Research, said Motorola has fallen far since 2006 when it was the No. 2 handset maker behind Nokia Corp.; it's now fighting for fifth place with Sony Ericsson.