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By Reuters
January 19, 2007
NEW YORK (Reuters)—Motorola Inc. plans to cut 3,500 jobs in the first half of 2007 to reduce costs and help it return operating margins to the double-digit percentage range, executives said on Friday.
The world's second-biggest maker of mobile phones outlined the plan to cut 5 percent of its 70,000-strong work force after reporting that fourth-quarter profit fell by 50 percent, hurt by a sharp drop in phone prices amid stiff competition.
Executives said the job cuts would affect middle managers.
"Our goal is to return to double-digit operating margins in the second half of this year," Chief Executive Ed Zander said in a conference call with analysts that was broadcast on the Web.
Analysts and investors are looking for clear signs from Motorola that it can turn around weak profits without sacrificing market share.
Motorola blamed the lower quarterly profit on discounts on the Razr, and price declines on its most expensive phones with high-speed wireless connections and on cheaper phones sold in emerging markets, where competition was brutal.
Chief Financial Officer David Devonshire forecast 2007 earnings per share would be flat to slightly above 2006's $1.13 per share. He said the forecast includes 7 cents in stock-based compensation expenses.
He forecast 2007 sales of $46 billion to $49 billion, compared with $42.88 billion in 2006.
Devonshire said the company had not changed its long-term target for profit margins of 12 percent to 14 percent. He also set a long-term gross profit margin target of 32 percent to 34 percent.
January 19, 2007
NEW YORK (Reuters)—Motorola Inc. plans to cut 3,500 jobs in the first half of 2007 to reduce costs and help it return operating margins to the double-digit percentage range, executives said on Friday.
The world's second-biggest maker of mobile phones outlined the plan to cut 5 percent of its 70,000-strong work force after reporting that fourth-quarter profit fell by 50 percent, hurt by a sharp drop in phone prices amid stiff competition.
Executives said the job cuts would affect middle managers.
"Our goal is to return to double-digit operating margins in the second half of this year," Chief Executive Ed Zander said in a conference call with analysts that was broadcast on the Web.
Analysts and investors are looking for clear signs from Motorola that it can turn around weak profits without sacrificing market share.
Motorola blamed the lower quarterly profit on discounts on the Razr, and price declines on its most expensive phones with high-speed wireless connections and on cheaper phones sold in emerging markets, where competition was brutal.
Chief Financial Officer David Devonshire forecast 2007 earnings per share would be flat to slightly above 2006's $1.13 per share. He said the forecast includes 7 cents in stock-based compensation expenses.
He forecast 2007 sales of $46 billion to $49 billion, compared with $42.88 billion in 2006.
Devonshire said the company had not changed its long-term target for profit margins of 12 percent to 14 percent. He also set a long-term gross profit margin target of 32 percent to 34 percent.
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