Motorola announces 7,000 extra job cuts

Motorola has announced a second down-sizing exercise which it says will return the company to profits by the end of 2002. The cuts will hit every part of the business.

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By  David Cass Published  June 27, 2002

Motorola, the world's second-biggest maker of mobile phones, says it is going to cut a further 7,000 jobs and take a $3.5bn (£2.29bn) charge to pay for a massive restructuring. The job cuts, which come in addition to previous reductions, are part of the company's efforts to cut costs by 20%.

The accumulative cuts are expected to return the company to its mid 1990s size and return it to profitability by the end of this year.

The company says the cuts will impact all aspects of the business and management in an effort to reduce expenses across the board. Motorola is the latest of the global giants to suffer the consequences of the telecoms and dot.com expansion frenzy of the late nineties. Ever since the so-called dot.com bust of 2000, corporations which survived have been trying to find the right size for operating in a more bearish consumer market.

Demand for mobile ‘phones is much reduced since people stopped changing their handsets as often as before.

After taking losses of $174 million in the first quarter of 2002 on revenues of $6 billion (down 20% from last year) chief operating officer Ed Breen says he expects Motorola to return to profits in the third and fourth quarters of this year. He also predicted an overall return to profitability by the end of the year even though sales would come in between five and ten percent lower than during 2001.

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