Motorola Inc, the world's second-largest maker of mobile phones, will cut 1,000 jobs as the company prepares to spin off its computer-chip business, costing US$50 million in severance payments.
The cuts are the deepest since Chief Executive Ed Zander joined in January. Zander took the semiconductor unit public in July and plans to spin it off by the end of the year, rendering some jobs at the company's Schaumburg, Illinois, headquarters redundant. Reductions will also be made at other offices, spokeswoman Jennifer Weyrauch said.
"This sort of thing happens with new management coming to town and taking a fresh look," said Jimmy Chang, who helps manage US$4 billion, including Motorola shares, at Rockefeller & Co in New York. "It's getting even more competitive and they need to hold on to their share."
The firings, which account for about 1.1 percent of Motorola's workforce, make up part of an effort to reduce costs as Motorola tries to win customers from market leader Nokia Oyj of Finland. Zander, 57, has brought in new managers and reversed market share losses since he took the helm in January.
Motorola's share of the global handset market grew to 15.8 percent in the second quarter from 14.5 percent a year earlier, according to researcher Gartner Inc. Nokia's share dropped to 29.7 percent from 35.6, according to the report released earlier this month.
Motorola has slashed jobs and shuttered operations since 2000, when it had 147,000 workers. The company cut 12,000 jobs last year, and former Chief Executive Christopher Galvin, the grandson of the company's founder, last year resigned amid conflicts with the board over how to rejuvenate sales.
The company now employs 88,000 people and has offices in 130 countries. That includes about 22,000 employees of Freescale, which is based in Austin, Texas. The company also said on Tuesday it would have US$80 million of expenses this quarter related to retiring debt and separating the Freescale operations. Both expenses are pretax, Motorola said in a statement.
The Freescale IPO raised US$1.58 billion, US$1 billion of which went to Motorola.
Businesses affected by the cuts include commercial, government and industrial solutions, electronic systems and broadband communications, Motorola said in a filing with the US Securities and Exchange Commission.
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