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Big job cuts at Motorola in effort to return to profitability

Motorola, Inc. today revealed that it is already on target to for its workforce reduction of 3500 by June 30 and is on track to achieve the $400 million in annualized cost savings that it announced in January. That’s not the end of the job slashings, however, as the company says that another 4000 layoffs – more than 6 percent of its workforce – are on the way.

The 4000 addition job cuts, along with prioritization of investments, discretionary-spending and expense controls, are expected to net Motorola another $600 million in annualized cost savings in 2008.

"Long-term, sustainable profitability is and always has been Motorola's top priority," said Tom Meredith, chief financial officer, Motorola, Inc. "Today's actions are an update to the commitment we made during our first-quarter earnings conference call -- to drive out additional costs -- and a continuation of the plan we announced in January. We are confident that the steps we are announcing today, together with the actions that we have outlined previously, will further improve the company's Financial and operational performance and create value for our stockholders."

"We are taking steps to ensure that, as these cost reductions are implemented, there will be no adverse impact on customer service and support, product quality and those research and development programs that are expected to contribute meaningfully to Motorola's revenues, profits and cash flow in 2008 and beyond," said Greg Brown, president and chief operating officer, Motorola, Inc.

For the remainder of this year, the company expects costs of approximately $300 million, or approximately $0.08 per share, and will consist primarily of severance and related expenses resulting from the workforce reductions.

Mobile phone analysts are pointing at Motorola’s weak product lineup as a culprit for the company’s sagging bottom line. Analyst Lawrence Harris said to the BBC, "The extra job cuts will certainly help them return to profitability but it's not enough to get them to the double digit profit margins they seek. They need exciting new products."

When Motorola released the original RAZR phone over two years ago, it was the hottest and most stylish gadget on its hands. Since then, Motorola has been unable to replicate the RAZR’s success in follow-up products such as the KRZR.

Despite that the RAZR remains one of the U.S. market’s most ubiquitous handsets, the majority of RAZR sales were at low, mass-market price points – a far cry from the profit margin realized during the phone’s introduction at $800.

After countless different colors and other variations, Motorola is finally releasing the true RAZR2 in July. The true sequel to Motorola’s most successful handset features 2GB of memory, a 2 MP camera, better sound quality and much improved software with Linux and Java support.

“With the modern style and powerful performance of RAZR2, Motorola is once again redefining the cell phone,” said Ed Zander, Motorola’s chairman and chief executive officer. “This device takes the world’s best-selling feature-phone to the next level. Combining groundbreaking new features and an even slimmer exterior than the original icon, the RAZR2 is capable of giving consumers the ultimate mobile experience.”

With intense cost-cutting measures in place and bets placed on the upcoming RAZR2, Motorola hopes to revive its mobile business before losing more marketshare to competitors Nokia and Samsung. Following the restructuring news, shares of Motorola rose 17 cents to $18.45 in extended trading, according to Bloomberg.



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Good to know
By FITCamaro on 5/31/2007 9:49:58 AM , Rating: 2
That by the time that someone like me retires, cost cutting from outsourcing and hiring foreign contractors who will work for less will pretty much have eliminated American engineering jobs. Unless of course employers realize what they're doing and change.

I have to wonder if crap like this is why my uncle left Motorola recently for another job. And he was high up in the company.




RE: Good to know
By OrSin on 5/31/2007 10:26:40 AM , Rating: 3
The out sources will stop soon. When the dollar crashs on the world market and the oil is sold for the Euro and Yen, there will be no need to outsource since keeping jobs here will be cheaper. Not a bright furture either way.


RE: Good to know
By Chadder007 on 5/31/2007 11:11:28 AM , Rating: 3
Yeah, its gotten ridiculous. Might as well just have a CEO chair based in Dubai, all manufacturing workers based in China , and all call centers in India.
They will eventually have a lot of the jobs shipped out, leaving few people in America to have the ability to even buy the products the companies want to push.


RE: Good to know
By retrospooty on 5/31/2007 11:34:01 AM , Rating: 2
"Might as well just have a CEO chair based in Dubai, all manufacturing workers based in China , and all call centers in India."

Totally untrue... There is alot of manufacturing in Taiwan, Malaysia and Mexico, and a great deal of call centers in the Phillipines as well. ;)


RE: Good to know
By FITCamaro on 5/31/2007 11:47:41 AM , Rating: 2
quote:
eaving few people in America to have the ability to even buy the products the companies want to push.


Exactly. Without good engineering jobs here in America, a lot more jobs will be lost as a result of people not being able to afford certain products. Other than doctors or lawyers, who's going to buy the luxury cars if theres no engineers who make a good amount of money? Other than those who lease them of course.

And the dollar isn't going to get that low. In fact its looking to be coming back from what I read recently.


RE: Good to know
By Talcite on 5/31/2007 12:55:13 PM , Rating: 2
I don't understand why people always equate a low dollar with a horrible economy. That is simply not true. A low dollar means increased exports since foreign investors can buy more of our products at a lower price. A higher dollar means increased imports. There is no importance to a nominal variable like the dollar in the long run. Now if you had said the real exchange rate was decreasing, then I'd be worried because that would indicate a lower living standard.

Anyways, there's no point in fretting about domestic or foreign goods, jobs or whatever. If free trade ends up taking hold internationally like it has in north america, then we'd all win out in the end. Of course the 'end' means 20 or 30 years from now. In the mean time, things might get slightly ugly. We wouldn't regress to the point where we would be living in shacks of course, but we certainly wouldn't be spending disposable income on useless things anymore.


RE: Good to know
By johnadams on 6/1/2007 3:11:06 AM , Rating: 2
I would think American engineering jobs that would remain are those that are obviously not outsourceable, like the design leads and those with management responsibilities/require heavy interactions with the business.

Would the engineering curriculums be updated to reflect this?


RE: Good to know
By Harold02 on 6/2/2007 10:21:15 AM , Rating: 2
One tiny problem. You don't e.g. become a design lead without having first been in the trenches, executing other people's designs, and then moving up the chain doing more and more design yourself.

There is no "update" to engineering curriculums that can replace experience.

We are eating our seed corn by assuming all the lower level stuff can be outsourced, contracted, H-1B-ed, etc. There will be very few design leads to replace the ones who eventually retire or get laid off because they are "too expensive."

Management: well, at least in programming, I've never had a good one who wasn't both once a programmer and currently up to date on the technology being used in the project. Hard to manage when you don't know the first thing about what your people are doing....

Again, there is no substitute for experience. The poor functional quality of so many designed in the US products can in part be attributed to this.


RE: Good to know
By johnadams on 6/3/2007 6:05:10 AM , Rating: 2
Good point, thx.


RE: Good to know
By Harold02 on 6/3/2007 7:24:34 AM , Rating: 2
You're welcome.

BTW, I should have said "a decade of experience" above, since that's about how long it takes to become a true expert---there's something seriously wrong in the field of programming in the US when 2-5 years of experience allows the prefix "Senior" to be added to titles.

Consistently developing software that "mostly works", year after year, is extraordinarily hard. It is one of the "secrets" of success of Microsoft (although the Vista fiasco shows that part of the company has lost a lot of that ability, but not e.g. the Office part). Look at all the "one trick pony" companies that develop something good, once, and then lose their ability to develop software except for minor refinements (sometimes), generally for good, generally when they lose the original team due to burnout or politics.

Lotus, Ashton-Tate (dBase), for a critical year or so Borland couldn't get Windows versions of their office products to work, Wordperfect did have something that didn't crash in Windows 3.x, but was unusable if you e.g. used figures (they would regularly drop down to the bottom of your document), etc. etc. These are just some of the best known examples.

I'd be a lot more comfortable about the future of this field in the US if there was the slightest general recognition that doing this right is hard , but as long as that is generally absent, companies like Microsoft will continue to do fairly well simply because, no matter how "bad" their stuff is in various ways, at least it doesn't crash every minute or two.

Achieving that minimal level of function is much harder than most people realize, witness how often Motorola's phones are said to crash (probably by people who use them in just a slightly different way that Motorola's engineers anticipated or tested for). As Motorola's bottom line shows, cool looks will get you only so far for only so long.


Software should be much better
By electriple9 on 5/31/2007 10:39:03 AM , Rating: 3
Motorola is been using the same old boring software on all of their phones. I hope they will release something better, with less freezing.
Thanks




RE: Software should be much better
By Wonga on 5/31/2007 1:09:26 PM , Rating: 3
I agree.

I've had five Motorola phones, all of which were unreliable. The first one, back in the early days, randomly rebooted. The second one, a V600, had faulty buttons. The third one, a replacement for the second, turned off one day and never came back on. The four one, again a replacement V600, randomly rebooted and had faulty buttons again. The fifth one, again a replacement, rebooted when it felt like it and in the end I sold it on eBay to some guy who didn't know any better. All of the V600s had slow software too - writing a text message tooks ages, the writing was always lagging behind the buttons you pressed.

I know many people who have owned a RAZR and they all say the software is unreliable, random reboots etc.

Motorola really needs to get their software in order. Reliability is key - a phone that reboots in the middle of a phone call is a joke. As far as I'm concerned, the pretty looks can come second. Maybe that's why I'm happy sticking with a 5 year old phone.


RE: Software should be much better
By darkpaw on 5/31/2007 5:17:30 PM , Rating: 2
I made the mistake of buying a Moto Q two months ago. I've been using cell phones for over 10 years and have never had to reboot a phone so often. Of course I'm stuck with it now for two years, or at least until I can buy a used phone off ebay for a decent price.


By Oregonian2 on 5/31/2007 6:30:53 PM , Rating: 2
The bummer thing about replacements is that they're probably "refurbs", meaning that they were broken units returned by somebody else and supposedly are fixed (but often aren't, still having the problem they had before). I hate refurbs, had so much trouble with them no matter who it came from (other than Plextor who comes to mind).


By Axbattler on 6/1/2007 3:16:08 AM , Rating: 2
To be honest, Motorola mobile have always been aesthetics first (fair enough if that's what their customers want). I didn't know they had such serious reliability issues, but I was always put off by the lack of functionalities in their phones. I've stepped down from smartphones given that it is another side of the spectrum that I can't justify (cost wise), but there are many phones in the same price range as Motoloras that provide more in general assuming the Motorola 'look' is not crucial.


RE: Software should be much better
By Ajax9000 on 5/31/2007 8:39:13 PM , Rating: 3
quote:
Motorola is been using the same old boring software on all of their phones. I hope they will release something better, with less freezing.


Odd. My wife and I both have RAZRs (well I haven't since my 18mth old daughter chewed on it and short-circuited the screens :-) and have had no more than 2-3 freezes over nearly two years.

Mind you, she hates the look-and-feel of the interface compared to her dead Sony-Ericsson K700i (another victim of our daughter :-) especially the organiser functions. She also likes Nokias' interfaces. Whereas I hate their interfaces and prefer Motorola & Siemens look-and-feel. The only thing I miss is good Outlook integration -- so an update there would certainly be welcome.

FWIW, I long had the impression that (generally speaking) humanities-type people usuallly prefer Sony-Ericsson & Nokia phones, and science and engineering types often prefer Motorola & Siemens -- then I met a Siemens engineer who agreed that it was pretty-much like that.

Adrian


RE: Software should be much better
By Shlong on 6/1/2007 1:36:40 PM , Rating: 2
I agree with you. I had the V600, original RAZR and RAZR v3 and it would freeze (white screen & reboot) all the time. However, when I used the SLVR & KRZR I didn't experience any freezeups at all. The menus still looked like crap (a little improvement). Motorola needs to hire some apple designers for the menu system & icons.


RAZR2
By Goty on 5/31/2007 10:25:38 AM , Rating: 2
Soooo... other than the camera, how is this phone and\y different than my V3xx? I can already run java apps, I have streaming music and video, the handset sounds great, and even the 1.3MP camera is PLENTY for a phone.




RE: RAZR2
By Oregonian2 on 5/31/2007 6:37:05 PM , Rating: 2
quote:
I have streaming music and video, the handset sounds great, and even the 1.3MP camera is PLENTY for a phone.


I still haven't quite figured out what phone cameras are good for. The KRZR I just got has a 2 megapixel one. Pretty crappy photos although a lot better than I expected from a phone. But still crappy compared to a "real" digital camera. Even compared to an old 2-megapixel Nikon digital camera. The phone camera isn't for taking pictures? Will I be figuring this out after I've had it for a while (it's new for me this week)?


RE: RAZR2
By Axbattler on 6/1/2007 3:47:27 AM , Rating: 4
Most people are more likely to carry their phones on a day to day basis than a camera. I know I've found myself in situations where I did not have a camera, but wished that I did. That's where the camera phone comes in. A crappy picture is better than no picture. But if I had the choice for a less crappy picture I'll take it (i.e. Go with the phone with the better camera).

It is opportunitic, you may even not ever use it - though mine certainly has seen some use.


RE: RAZR2
By Rollomite on 6/1/2007 12:19:31 PM , Rating: 2
You also have to keep in mind it's not all about megapixels. There are other factors involved in the image quality. I have an SE W810i, with a 2mp cam, but it also has auto focus, and a decent lens. I've actually taken some surprisingly good photos (at 1600X1200 even). Granted, it won't replace a dedicated camera, but like someone said, most people don't carry a camera 24/7, and sometimes you just wanna snap a quick shot.

Vanilla


photo
By inthell on 5/31/2007 11:07:27 AM , Rating: 2
chic in the photo is hot.




RE: photo
By brenatevi on 5/31/2007 11:24:58 AM , Rating: 2
Ah, advertising for the Geeks: just provide a picture of an attractive lady, and who cares about the product. To Quote "Chic in the photo is hot."

Just leaf through any tech magazine and you know what I say is true.


RE: photo
By noxipoo on 5/31/2007 11:30:27 AM , Rating: 2
so? the point of advertising is to attract attention and she does it better than some dude or just the phone. and fyi, hot chicks appeal to more than geeks.


RE: photo
By jacarte8 on 5/31/2007 4:35:27 PM , Rating: 2
Exactly... so beer marketers are advertising to geeks as well? The Coors twins advertise to everyone with a pulse on the planet.


RE: photo
By InsaneGain on 5/31/2007 12:59:04 PM , Rating: 2
I was just thinking the same thing.


RE: photo
By HVAC on 5/31/07, Rating: 0
You've got to be kidding....
By Vanilla Thunder on 5/31/2007 10:18:49 AM , Rating: 5
quote:
“With the modern style and powerful performance of RAZR2, Motorola is once again redefining the cell phone,”


Redefining the cell phone? This has to be a joke. In 4 years the best Motorolla can do is refresh an ancient phone with features that most SE or Nokia phones have had for years. To say the least, I won't be trading in my W810i for one anytime soon.

Vanilla




RE: You've got to be kidding....
By AndreasM on 5/31/2007 12:03:33 PM , Rating: 2
It seems like Motorola is unable to grasp what made RAZR popular. It wasn't the features, but the slick looks. Recycling said looks and just adding new features will make RAZR2 a failure, the market has moved on from RAZRs design and will want something smaller (and no plastic phones that feel like toys thankyouverymuch). I'm still waiting for a pen-sized phone, but I guess I shouldn't hold my breath.


RE: You've got to be kidding....
By Oregonian2 on 5/31/2007 6:26:28 PM , Rating: 2
Wife and I just got KRZR's. Features don't matter much other than being able to make phone calls and talk, but my wife (and I too, if truth be known) adores how it looks. Despite being a finger print magnet, the phone looks magnificent. She wishes it was red though, I like the Blue (there is a Red one, but it's a CDMA version, we've got the GSM version for international (quad band) as well as domestic use).


Cutting jobs will obviously help
By zsouthboy on 5/31/2007 10:27:18 AM , Rating: 2
support and service and the creation of new products.

*rolleyes*

Cut jobs = short term good, long term bad.

By the way, do you think the money saved will offset the lower morale amongst the remaining employees?

Nah, there aren't any concrete numbers there, so we'd better not take that into account.




By ChristopherO on 5/31/2007 2:35:45 PM , Rating: 2
"By the way, do you think the money saved will offset the lower morale amongst the remaining employees?"

Potentially yes... It depends on the details. Many firms usually couple large layoffs with retention bonuses or some added incentive to help the remaining people realize they are valuable. It is part of the write-off taken when they down size.

Granted if Mot is planning another layoff they will probably wait until after Round 2 before they do something along those lines.

I hate to say it, but layoffs are usually not a terrible things. Most firms bloat after awhile, they continually add people they don't really need due to management pressure, etc, etc, etc. It stinks if you're let go, but if firms had tighter control on the influx of employees they could avoid these situations.

Unfortunately, lots of places fall back on India -- they get employee bloat as well, but when you're paid a fraction of the US your labor force can bloat to insane numbers before your cash flows are impacted.

And opposite to popular opinion, most US firms hate outsourcing. They know it isn't as efficient, but it's typically what happens when there is neglect within HR and/or other structural problems. In that instance, the band-aid is usually easier than the solution.


Nobody likes to get fired !
By crystal clear on 5/31/2007 11:43:28 AM , Rating: 2
quote:
job cuts at ____?___ in effort to return to profitability


Headlines like these have become routine news items.
Intel,IBM, etc etc & the list goes on & on.

Whatever the causes from Outsourcing to Profitability,the
effects have long term consequences.

quote:
It's no secret that there are fewer undergraduate students majoring in computer science today than there were in the late '90s. The Computing Research Association's statistics show that the number of freshman who list computer science as a probable major has fallen by 70 percent since 2000.


The final analysis is that people in the USA have LOST FAITH.

They want JOB stability which the computing profession does not provide,so they choose other professions.

Then there are those Fools who believe in the DEAD WOOD ideaology - Just ready to FIRE anybody more than 5 to 10 years at one company.

Then there are Idiots who believe in "You cannot teach an old dog new tricks"-the copyright holder of this phrase is Intel V.P.

All the above factors contribute to Talented college students prefering to choose OTHER professions that provide stability & growth.

Nobody likes to get fired !




By crystal clear on 5/31/2007 12:22:30 PM , Rating: 2
quote:
ideaology


A word- a mix of "idea" & "ideology"


yes
By sprockkets on 5/31/2007 11:45:32 AM , Rating: 2
Use a MING and see how nice the Linux software is




Guess...
By HVAC on 5/31/2007 2:48:10 PM , Rating: 2
Who wants to guess how long it will take Verizon to nerf the features?




Model
By henrikfm on 6/1/2007 9:46:23 AM , Rating: 2
Which is the name of the girl of the photo?

Anyone knows?




awdoj
By koglo on 5/31/07, Rating: -1
RE: awdoj
By koglo on 5/31/07, Rating: -1
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By koglo on 5/31/07, Rating: -1
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By koglo on 5/31/07, Rating: -1
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RE: awdoj
By elpresidente2075 on 5/31/2007 12:38:20 PM , Rating: 1
Looks like someone figured out how to hack the system. Congratulations, jackass.


RE: awdoj
By crystal clear on 5/31/2007 12:46:37 PM , Rating: 1
Block his access to the site-Simple


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