SCHAUMBURG, Ill. -- Motorola Inc. here today announced it will reduce its workforce by another 8%, or 9,400 employees, over the next 12 months. The troubled company also indicated it would shut down additional but undisclosed chip plants, as part of its ongoing push towards a "asset light" manufacturing model.
The announcement--part of Motorola's ongoing efforts to return to profitability by 2002--follows a series of losses, layoffs and setbacks at the company, especially in its troubled semiconductor business. In total, Motorola has reduced its headcount by 48,400 jobs over the last 12 months.
With its latest cost-cutting effort, Motorola claims it could save approximately $865 million in 2002 and about $1.1 billion on an annualized basis thereafter.
Many of those cost-cutting moves come in the form of layoffs. In the current quarter, Motorola already notified about 4,100 employees that their positions are being ended. Another 4,000 employees within the company are now being notified that their position would be gradually eliminated over the next year.
Motorola will also reduce its headcount by approximately an additional 1,300 employees across its equipment manufacturing businesses.
In addition, the company's loss-ridden Semiconductor Products Sector also plans to phase out additional manufacturing facilities over the next year, as part of its new "asset light" business model. The company did not disclose the details, but it has repeatedly announced plans to embrace an aggressive chip-outsourcing strategy by using more silicon foundries.
Over the last year or two, Motorola has announced major foundry alliances with Singapore's Chartered Semiconductor Manufacturing Pte. Ltd. and Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC).
On a positive note, Motorola said it still expects to achieve its fourth-quarter forecast. At that time, the company said that it expected fourth-quarter sales for ongoing operations to be flat-to-3% higher versus the third-quarter of 2001.
For ongoing operations, third-quarter 2001 sales were $7.24 billion. The company expects to incur an operating loss, on a pro-forma basis, of 4 to 5 cents per share in the fourth-quarter of 2001.
Robert L. Growney, president and chief operating officer of Motorola, painted a mixed picture for the company. "Based on our current view of investment community consensus expectations for the profitability of our different business segments for the fourth quarter, we expect the Commercial, Government and Industrial Systems and Personal Communications (wireless handsets) segments to exceed these current expectations, offset by lower than expected results in the Global Telecom Solutions and Broadband Communications segments," he said.
"The company's Semiconductor Products and Integrated Electronic Systems segments are expected to achieve results close to consensus expectations," he said.
Motorola is also confirming that the company expects to be profitable in 2002 and believes that it can achieve the consensus expectation of 2002 annual earnings of 15 cents per share, on a pro-forma basis.
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