By David Meyer
Friday, June 01 2007 06:02 AM
URL: http://www.zdnetasia.com/news/communications/0,39044192,62017677,00.htm

Motorola is to shed a further 4,000 employees in its quest to cut costs.

The handset and network-equipment manufacturer claims the reduction in head count in 2008--which it announced on Wednesday--will help shave US$600 million off its annual operating costs.

Motorola is already on course to have cut 3,500 jobs by the end of June as part of a structural review which was announced after its Q1 results this year. Motorola said at the time that the review would save it US$400 million a year.

"Long-term, sustainable profitability is--and always has been--Motorola's top priority," said Tom Meredith, Motorola's chief financial officer, on Wednesday. "We are confident that the steps we are announcing today, together with the actions that we have outlined previously, will further improve the company's financial and operational performance and create value for our stockholders."

Greg Brown, the company's president and chief operating officer, promised that the cost reductions would have no adverse effect on Motorola's customer service and support, product quality and "those research and development programs that are expected to contribute meaningfully to Motorola's revenues, profits and cash flow in 2008 and beyond". There is, as yet, no word on how many jobs could go in Motorola's UK operations, or in which divisions of the company they will go.

Martin Garner, an analyst at Ovum, said the move revealed the seriousness of Motorola's portfolio problems. "This move strengthens our view that Motorola's handset product problems are deeper than was clear at the end of Q1," he said. "It is clear that Motorola has known for over six months that its handset product portfolio is in trouble but, apart from cutting costs, there is little evidence so far of steps to fix this." Garner suggested that "a broad-based overhaul" of all segments of Motorola's product portfolio might be necessary to put its business back on track.