Motorola is to axe 10 per cent of its workforce in a bid to halt the downward spiral of its profits in semiconductors and pagers.
The company said it would take a $1.95 billion charge to pay for the 15,000 layoffs and to consolidate the two declining businesses.
Analysts say it has failed to translate its dominance in cellular telephones to the emerging digital mobile communications market, and its cellphone and pager products have suffered from the recent collapse of the Asian market.
These businesses and Motorola's semiconductor operations have all suffered in the past couple of years from price wars, and the company warned it could make a loss in its second quarter even before the massive restructuring charge. Analysts reacted badly, having predicted profits of 20 cents a share. A year ago it earned 44 cents a share.
However, some analysts were heartened that Motorola was taking drastic action rather than piecemeal measures. "I think it's great that they are finally biting the bullet," said one.
Motorola's chief executive Christopher Galvin said the company would now focus on "two powerful propositions" - increasing the portability of its wireless devices and embedded chips for non-computer devices.
This is the most drastic move so far in Galvin's strategy - initiated when he took the helm early last year - to axe non-strategic businesses and restructure to cut costs. Rumours have circulated that he will split Motorola into two large divisions, one for wireless network infrastructure and one for consumer products such as mobile phones, but all Galvin would say yesterday was that he will announce a "renewal" of the communications equipment business next month.
Galvin is the grandson of Motorola's founder and son of its most famous chief executive, Robert Galvin.
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